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Malaysian crude palm oil futures ended higher supported by strong CBOT soy oil futures, strong exports ahead of the Lunar New year Holiday. The Malaysian palm oil market will be closed on Monday and Tuesday to mark the Lunar New Year.

CPO active contract has edge higher again. Important resistance is at 1965 Malaysian ringgit (MYR) a 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. The view is still mixed, but there are signs that the bearishness has abated.

We could either see direct rise above 1965 MYR/tonne for a test of 2061 MYR/tonne or even higher or a sideways consolidation between 1860 MYR/tonne and 1965 MYR/tonne followed by a rise higher. 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 above the zero line in the indicator suggesting bullishness.

Prices are above the short-term 8-day period EMA at 1912 MYR/tonne indicating a bullish reversal and the 34-day period EMA is at 1893 MYR/tonne. Therefore, look for palm oil futures to rise.

Supports are at 1915, 1895 and 1865 ringgits. Resistances are at 1956, 1978 and 2005 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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