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Gnanasekar. T

Malaysian crude palm oil futures ended higher on Friday as the market got a boost from improving exports and higher energy prices providing added support. Prices rose higher despite a strengthening ringgit on expectation of demand to pick up in the coming month.

A reduction in base import prices in India also added to the sentiment. The base import price for crude palm oil had been reduced to $430 a tonne from $434. Cargo surveyor SGS said exports of Malaysian oil palm products for March 1-31 rose almost 15 per cent to 1,057,879 tonnes from 920,806 tonnes in February.

As mentioned in the previous up date, failure to cross 1,478 Malaysian ringgit (MYR) a tonne level lead to further bearishness finding support close to 1,428-30 MYR/tonne. Important support lies at 1,425-36 levels being the long-term trend line support point. Immediate resistance will be seen at 1,454 MYR/tonne.

We still believe prices could slowly edge higher towards 1,566 MYR/tonne in the coming months or even higher towards 1,600 MYR/tonne. Only, an unexpected move below 1,408-10 MYR/tonne can cast doubts on our overall bullish view. 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.

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. We can now expect the explosive third wave to begin. Unexpected break below 1,400 MYR/tonne will force us to abandon this count. RSI is in the neutral zone indicating that it is neither overbought nor oversold.

The averages in MACD have gone below the zero line in the indicator suggesting bearishness. Prices are below the short-term 8-day period EMA at 1,443 MYR/tonne indicating short-term bearishness and the 34-day period EMA is at 1,454 MYR/tonne.

Therefore, look for palm oil futures to test support levels and rise higher subsequently.

Supports are at MYR 1,430, 1,424 and 1,410. Resistances are at MYR 1,454, 1,478 and 1,501.

(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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