• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Malaysian crude palm oil futures ended sharply higher on Friday helped by strong gains in rival soya oil. Robust demand from China and Europe are seen as key drivers for palm after several months of decline in exports. Drought weather conditions in the US are supporting prices of soya complex underpinning CPO futures. Higher energy prices are still underpinning CPO futures as foreign demand for palm oil for bio-diesel will continues to rise.

CPO active month futures headed higher in line with our expectations. Important near-term resistance is at 1523-25 Malaysian ringgit (MYR) being the long-term trend line resistance point.

A daily close above this point should result in further strengthening of prices targeting 1575-85 MYR/tonne followed by 1631 MYR/tonne. We favour a corrective dip to 1495 MYR/tonne or even lower to 1480 MYR/tonne levels and then rise higher towards 1565 MYR/tonne or even higher to 1600 MYR/tonne.

We will continue to stick with the same favoured wave counts. 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 1410 MYR/tonne will force us to abandon this count.

RSI is in the overbought zone indicating a possible correction lower to take place.

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

Prices are above the short-term 8-day period EMA at 1491 MYR/tonne and the 34-day period EMA is at 1470 MYR/tonne.

Therefore, look for palm oil futures to test the resistance levels and then correct lower.

Supports are at 1495, 1478 and 1454 ringgits. Resistances are at 1525, 1565 and 1585 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.)

Gnanasekar. T

More Stories on : Technical Analysis | Oilseeds & Edible Oil

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Fundamentals loaded in favour of higher crude prices

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line