The Hindu Business Line : Palm oil futures seen consolidating

Market participants are looking forward to Malaysian export estimates data for the whole month of April due on May 2, which is generally expected to show a rising trend compared to the previous months.

CBOT soya oil prices rallied higher on prospects for soy bio-diesel use to increase in the coming months on account of rising crude prices.

However, the major concern is the currency as it hits eight year highs and further appreciation is expected as the dollar takes a beating globally.

CPO futures rose higher as per our expectations.

Prices have broken an important resistance at 1475 Malaysian ringgit (MYR) a tonne.

Prices could slowly edge higher towards 1566 MYR/tonne in the coming months or even higher towards 1600 MYR/tonne as long as 1380 MYR/tonne remains intact.

For the bull-run to remain intact 1420 MYR/tonne should be undisturbed. Immediate near-term support is at 1465 MYR/tonne. The move to 2003 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 1329 MYR/tonne.

We can now expect the explosive third wave to begin. Unexpected break below 1375 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 above the zero line in the indicator suggesting a bullish reversal. Prices are above the short-term 8-day period EMA at 1470 MYR/tonne indicating short-term bullishness and the 34-day period EMA is at 1456 MYR/tonne.

Therefore, look for palm oil futures to consolidate and rise higher. Supports at MYR 1465, 1447 and 1434. Resistances at MYR 1497, 1519 and 1534.

(The author is in the advisory panel of Multi Commodity Exchange of India Ltd(MCX). The views expressed in this column are his own and not that of MCX. 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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