SINGAPORE (Jan 15): Palm oil may test a support at RM2,121 per tonne, a break below which could cause a loss into the range of RM2,074-2,103.
The support is identified as the 114.6% projection level of an upward wave c from RM1,979. The wave structure of the uptrend from RM1,940, along with the drop from the Jan 9 high of RM2,202, suggests a reversal of the trend.
The drop makes the pattern from the Dec 19, 2018 high of RM2,200 look like a double-top, which indicates a slide to RM2,103. A rising trendline points at a similar target.
A break above RM2,150 may lead to a gain limited to RM2,180. On the daily chart, palm oil sees to have resumed its downtrend within a falling channel. A projection analysis reveals a target at RM2,091, the 107% projection level of a downward wave (c).
(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.)