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Gnanasekar. T

MALAYSIAN crude palm oil futures ended lower on Friday on profit-taking ahead of a long holiday. CPO prices moved in a narrow range in thin volumes on the only two trading days of the week.

The third month active front month contract rose higher as expected. Strong support will be seen at 1,423 Malaysian ringgit (MYR) a tonne, a rising trend line support point. Only a move below 1,393 MYR/tonne will cast doubts on our overall bullish outlook, which we continue to favour in spite of the recent fall in prices.

Expect prices to edge lower towards 1,408-10 MYR/tonne in the coming week or even lower below 1,400 MYR/tonne and subsequently rise higher from there.

The move to 2,003 MYR/tonne is the end of the fifth wave impulse and a move lower from there is a corrective A-B-C pattern in the making. The correction ended at 1,252 MYR/tonne.

We are possibly in a new impulse with the first wave of the impulse ending at 1,504 MYR/tonne and the second wave ending at 1,329 MYR/tonne.

The third wave seems to have begun looking to target the 1,600 MYR/tonne levels ultimately.

RSI is in the neutral zone indicating that it is neither overbought nor oversold.

The averages in MACD are above the zero line in the indicator suggesting bullishness to be intact.

Prices are above the short-term 8-day period EMA at 1,434 MYR/tonne and the 34-day period EMA is at 1,431 MYR/tonne. Therefore, look for palm oil futures to test the support levels.

Supports are at 1,421, 1,408 and 1,393 ringgits. Resistances at 1,445, 1,458 and 1,478 ringgits.

(The author is associated with the Multi Commodity Exchange of India Ltd. The views expressed in this column are his own and not that of his employer. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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