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Malaysian crude palm oil futures ended higher supported by strong CBOT soya oil futures. CPO futures even ignored news of poor palm exports as the focus is now mostly on soya oil. Exports of Malaysian palm oil products in January fell 19.1 per cent to 957,228 tonnes. A reversal in energy prices has also contributed to the bullish sentiment.

CPO active contract is showing signs of reversing the bearish trend. Important resistance is at 1951 Malaysian ringgit (MYR) tonne and a daily close above 1978 MYR/tonne will rekindle bullish expectations for a test of the recent highs at 2061 MYR/tonne or even higher.

However, it is better to be cautious around 1976-80 MYR/tonne levels and only a break and close above 1980 MYR/tonne will signal a clear bullish reversal. 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 could be possibly tracking a fourth wave correction, which has some more room left on the downside. RSI is in the neutral zone indicating that it is neither overbought nor oversold.

The averages in MACD are on the verge of going below the zero line in the indicator suggesting a bearish reversal to happen.

Prices are above the short-term 8-day period EMA at 1891 MYR/tonne indicating a bullish reversal and the 34-day period EMA is at 1884 MYR/tonne.

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

Supports are at 1890, 1865 and 1835 ringgits. Resistances are at 1980, 2005 and 2065 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.

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