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Gnanasekar T.

Malaysian crude palm oil futures ended higher on Friday due to short-covering ahead of a holiday on Monday in CBOT. CPO futures have been under pressure triggered by fears of lower exports and rising production. Higher crude oil prices will continue to underpin prices and see steady demand for it for bio-fuel from other destinations as seen above.

CPO futures found support near the trend line support point at 1425-28 Malaysian ringgit (MYR) tonne levels and rose higher.

Near-term resistance is at 1452 MYR/tonne and a move above that should see the resistance at 1478 MYR/tonne being tested.

We continue to maintain our view that 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 1408-10 MYR/tonne should be undisturbed.

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 below the zero line in the indicator suggesting bearishness now.

Prices are below the short-term 8-day period EMA at 1444 MYR/tonne indicating short-term bearishness and the 34-day period EMA is at 1451 MYR/ton.

Therefore, look for palm oil futures to test the resistance levels.

Supports at 1444, 1425 and 1410 ringgits. Resistances at1452, 1478 and 1495 ringgits.

(The author is the director of Commtrendz Research and 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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