SINGAPORE (April 11): Palm oil may break a support at RM2,591 per tonne and fall more towards the next support at RM2,561, as suggested by its wave pattern and a Fibonacci projection analysis. The contract is riding on a wave (5), the fifth wave of a five-wave cycle from the Jan 18 high of RM3,175. This wave could be broken down into three smaller waves. A Fibonacci projection analysis on the third wave labeled c reveals the support at RM2,591, the 123.6% level.

It is very rare that a wave c ends around its 123.6% level. Most likely, the wave c could travel into the range formed by the 161.8% and the 138.2% levels. In the case of palm oil, this range is from RM2,514 to RM2,561. Resistance is at RM2,609, a break above which could lead to a gain to RM2,638.

(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.)