SINGAPORE (Aug 6): Palm oil may break a support at 2,187 ringgit and drop to 2,149 ringgit per tonne, as suggested by its wave pattern and a projection analysis.
The support is provided by the 61.8 percent projection level on a downward wave C from 2,348 ringgit. The bounce triggered by this barrier developed into a flat which is a bearish continuation pattern.
The wave C looks incomplete, as it is capable of traveling to 2,088 ringgit. On the daily chart, the bounce looks like a pullback towards a resistance at 2,226 ringgit, the 86.4 percent projection level of a downward wave(C).
A drop to 2,177 ringgit (first chart) could confirm a break below 2,187 ringgit, while a break above 2,218 ringgit, however, will signal the formation of a double-bottom around 2,149 ringgit, and a bullish target at 2,287 ringgit will be established.