Palm oil may retrace to RM2,094

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SINGAPORE (March 20): Palm oil may retrace to RM2,094 per tonne, following its failure to break a resistance at RM2,142.

The resistance is identified as the 50% retracement of the uptrend from RM1,940 to RM2,344. It could have triggered a pullback towards a falling trendline.

It is unclear which wave has been driving the bounce from the March 15 low of RM2,038. It could be a wave b or wave a. The bounce is labeled b as the fall from RM2,344 looks like a double-zigzag pattern, which consists of seven waves in total.

Regardless of the wave structure, palm oil is highly likely to retrace to RM2,094 first. Another retracement analysis on the downtrend from RM2,344 to RM2,038 reveals a resistance at RM2,155, which works together with RM2,142 to prevent a rise.

A break above RM2,155 could lead to a gain to RM2,190.

(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.)