SINGAPORE (Jan 25): Palm oil faces a strong resistance at RM2,304 per tonne, a break above which could lead to a gain into the range of RM2,322-2,351. The resistances is identified as the 261.8% projection level on an uptrend from RM1,979. The successive gains over the past few days have not been disrupted by any decent correction, which may be triggered by the current resistance.
However, based on the strong momentum, the possible correction may be limited to RM2,274. Most likely, the contract will consolidate within the range of RM2,274-2,304 for a while before resuming its rally, as a bullish pennant suggests an aggressive target of RM2,390.
On the daily chart, a projection analysis reveals that palm oil may eventually extend its gains to RM2,431, the 61.8% level, as suggested by the upper channel.
A break below RM2,274 could cause a loss to RM2,245.
(Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own. No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.)