02.10.2018 (The Edge Markets MY) - SINGAPORE (Oct 2): Palm oil may seek a support around RM1,976 per tonne in the fourth quarter and then bounce towards a resistance at RM2,455.

The support and the resistance are identified respectively as the 61.8% and the 50% retracements on the uptrend from the September 1986 low of RM424 to RM4,486.

The long-term consolidation from RM4,486 has been well controlled by the various retracements. Palm oil started a very decent bounce when it failed to break below RM1,976 in August 2015. Another bounce is expected to occur when the contract drops to RM1,976.

Strengthening the support at RM1,976 is another one at RM1,902, the 61.8% projection level of a downward wave C from RM3,202. These two resistances will form a strong support zone to trigger a bounce.

It is not very clear how strong the coming bounce will be. Most likely it will be limited to RM2,455, as a head-and-shoulders developing between March 2016 and December 2017 suggests a bearish target around RM1,500.

An immediate support at RM2,150 looks vulnerable, as a weak rebound triggered by this level has been reversed. The reversal signals a continuation of the wave C towards RM1,976.