28.03.2018 (The Edge Markets MY) - SINGAPORE (March 28): Palm oil may drop to RM2,150 per tonne in three months, as suggested by a triangle, the wave pattern and a projection analysis.

A study on the long-term chart back to 2008 suggests that palm oil is still consolidating within the huge triangle. Five waves make up this pattern. The final wave labelled E is unfolding towards RM2,150, its 50% projection level.

Mathematically, the current drop from RM3,202 is closely related to the downtrend from the February, 2011 high of RM3,967. This relation suggests an extension of the downtrend, towards RM2,150. The lower trendline of the triangle indicates a similar target.

The support at RM2,398 has been intact for a long time. However, this time, it looks vulnerable, after palm oil briefly pierced below this barrier. Strategically, a break will be confirmed when palm oil drops to RM2,350.

On the daily chart, the downtrend from RM3,202 is extending, driven by a wave c.

A projection analysis reveals that palm oil has deeply pierced below the 61.8% level at RM2,416. It has a better chance of falling to RM2,119.

Bulls are to be cautioned of a trend reversal should the contract rise above RM2,508. However, only a surge above RM2,599 could confirm such a reversal.