SINGAPORE (March 9): Palm oil looks neutral in a range of 2,820-2,880 ringgit per tonne and an escape will suggest a direction.

The range is formed by the 23.6% and the 38.2% Fibonacci retracements of the downtrend from the Feb 10 high of 3,135 ringgit to the Feb 28 low of 2,723 ringgit.

The uptrend from 2,723 ringgit has adopted a five-wave mode. Such a wave structure suggests this trend is far from complete. Palm oil could be either riding on a wave c or a stronger wave (3), both of which are capable of travelling into the zone of 2,929-2,978 ringgit.

A break above 2,880 ringgit will confirm the extension of the uptrend towards 2,929 ringgit. The break is likely as palm oil failed to break 2,820 ringgit on Wednesday.

The failure has confirmed a valid break above the trendline falling from 3,135 ringgit and a reversal of the downtrend from the same level.

A drop to 2,860 ringgit may be extended to 2,820 ringgit. - by Wang Tao, Reuters

(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.)

(US$1 = 4.4430 ringgit)