Technicals Palm oil may rise to 2,649 ringgit in three months

by **Cals** Wed 24 Dec 2014, 19:27

Technicals
Palm oil may rise to 2,649 ringgit in three months

SINGAPORE (Dec 24): Palm oil may approach a key resistance at 2,338 ringgit per tonne over the next three months, a break above which will lead to a further gain to 2,649 ringgit.
The resistance is provided by the 61.8 percent Fibonacci retracement on the rise from the Oct. 28, 2008 low of 1,331 ringgit to the Feb. 10, 2011 high of 3,967 ringgit. It blocks the way towards the 50 percent level at 2,649 ringgit.
The rebound from the Sept. 2 low of 1,914 ringgit failed to extend above the resistance, but the failure does not necessarily mean that the rebound was over.
On the contrary, the rebound may have resumed towards 2,649 ringgit, as it followed the completion of a five-wave cycle that developed from 3,967 ringgit.
Based on the duration and size of the cycle, the rebound could be too brief to have completed around 2,338 ringgit.
Another Fibonacci retracement analysis on the fall from the March 11 high of 2,916 ringgit to 1,914 ringgit reveals palm oil has found a support around 2,060 ringgit, the 14.6 percent level. It is heading towards 2,297 ringgit, the 38.2 percent level.
Theoretically, once this resistance at 2,297 ringgit is broken, palm oil may easily break the key resistance at 2,338 ringgit and rise quickly towards a range of 2,533-2,680 ringgit, formed by the 61.8 percent and the 76.4 percent levels.
A break below the support 2,060 ringgit could signal the completion of the rebound and the low at 1,914 ringgit will be revisited.
** 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. **