The Edge Markets (19/10/2017) - SINGAPORE (Oct 19): Palm oil January contract may fall to RM2,721 per tonne, as suggested by its wave pattern and a Fibonacci projection analysis.

The drop on Oct 17 seems to be closely related to the preceding downtrend from the Sept 14 high of RM2,860, as revealed by the Fibonacci projection analysis.

Such a relation suggests the drop could be driven by a wave C, the third wave of a three-wave cycle from RM2,860. This wave is travelling towards a range of RM2,643-RM2,691. The support at RM2,755, the 7% level, worked as a weak support.

It is not very clear if the 14.6% level at RM2,739 could temporarily hold the fall and trigger a weak bounce. Eventually, palm oil may break this support and fall further.

A break above RM2,755 could lead to a gain to RM2,769.

(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.)