SINGAPORE (June 14): Palm oil may test a support at RM1,986 per tonne, as it faces a resistance at RM2,020.
The support and the resistance are identified as the 100% and the 61.8% projection levels of a downward wave c from RM2,075.
The bounce triggered by the support was a bit stronger than expected. Despite the strength of the bounce, the wave c looks incomplete. It may eventually travel to RM1,931, as suggested by a wedge/pennant.
A break above RM2,020, however, could confirm the completion of this wave c. A bullish target range of RM2,041-2,075 will be established accordingly.
On the daily chart, another projection analysis reveals a support at RM1,971, the 86.4% projection level of a downward wave C from RM2,896. This support helped trigger the bounce from the June 12 low of RM1,964 as well.
A rise above the June 13 high of RM2,021 could signal the extension of the bounce towards RM2,046.
(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.)