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Gnanasekar T.

Malaysian crude palm oil futures ended lower on Friday on weekend profit taking. This was despite a market-friendly data issued by the official Malaysian Palm oil Board (MPOB) and the cargo surveyors.

Exports of Malaysian palm oil products during November 1-10 rose marginally higher to 451,440 tonnes, cargo surveyor Societe Generale de Surveillance said. The MPOB said stocks at the end of October fell 11.44 per cent and output was down 13.03 per cent. It said exports during the month jumped 9.13 per cent.

CPO active January month contract continues to find resistance at the 1700 Malaysian ringgit (MYR) a tonne in coming week, which might result in a fall to 1648 MYR/tonne levels or even lower to 1620 MYR/tonne levels being the fibonnaci retracement levels as seen in the chart above.

As mentioned in the previous update, a bullish triangle pattern is in the making and a break above key resistance at 1755-60 MYR/tonne and a close above 1795 MYR/tonne has the potential to take for a minimum target of the recent high at 2003 MYR/tonne followed by another technical objective at 2600 MYR/tonne.

However, as long as the long-term rising trend line at 1545-1560 MYR/tonne contains downside attempts, the above view looks promising. 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 now in the powerful third wave impulse.

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. Prices are also below the short-term 8-day period EMA at 1680 MYR/tonne indicating weakness in the near-term. Therefore, look for palm oil futures to correct lower.

Supports are at MYR 1648, 1620 and 1590. Resistances are at MYR 1678, 1705 and 1735.

(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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