Palm oil may retest support at 4,177 ringgit due to higher productioin

Malaysian Palm Oil Futures

SINGAPORE: Palm oil may retest a support at 4,177 ringgit a tonne, a break below which could open the way towards 3,994-4,072 ringgit range.

The deep fall on Wednesday confirmed a reversal of the uptrend from 3,220 ringgit. A retracement analysis reveals a target zone of 3,847 ringgit to 3,994 ringgit.

Malaysia’s palm oil stocks at the end of October expanded for a fifth month to a three-year high
as production improved, data from the nation’s palm oil board showed on Friday.

Inventories in the world’s second-largest producer rose 3.74% from the previous month to 2.4 million tonnes,
its highest since Sept. 2019, according to the Malaysian Palm Oil Board (MPOB).

However, it was slightly lower than a Reuters’ survey pegging inventories at 2.53 million tonnes.

The support at 4,177 ringgit triggered a bounce, which is classified as a pullback towards a rising trendline.

The pullback is expected to end in the range of 4,264 ringgit to 4,311 ringgit.

A break above 4,311 ringgit may lead to a gain to 4,368 ringgit.

Palm oil may retest support at 4,264 ringgit

On the daily chart, the right shoulder of an inverted head-and-shoulders has started to develop towards 3,522 ringgit, assuming that it is roughly symmetrical to the left shoulder.

Wave pattern indicates such a drop as well, as the bottom of the wave ii is around 3,522 ringgit.

The journey towards 3,522 ringgit could be rough, somehow mirroring the rise from the July 14 low of 3,489 ringgit.