The Hindu Business Line : Palm oil could test resistance, drop

Malaysian crude palm oil futures ended mixed as the markets were looking forward to the price outlook conference for further direction. The market jumped 1.6 per cent on Thursday, boosted by firm soya oil and hopes of a bullish forecast from the meeting. However, expectations of Indian demand to increase on the back of a not so good oilseed harvest and prevailing lower duty structure.

CPO active May contract moved higher again finding support at recent lows. Resistance will be at 2005 Malaysian ringgit (MYR) a tonne, a trend line resistance point. As expected, support was seen in the 1911-15 MYR/tonne region. Favoured view now expects prices to find strong resistance in the 2005 MYR/tonne range and fall lower again towards 1900 MYR/tonne levels or even lower.

Only a move above 2040 MYR/tonne will rekindle bullish expectations. 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 1948 MYR/tonne indicating short-term bullishness and the 34-day period EMA is at 1923 MYR/tonne. Therefore, look for palm oil futures to test the resistance levels and head lower again. Supports are at 1940, 1915 and 1885 ringgits. Resistances are at 1985, 2005 and 2040 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.)

More Stories on : Technical Analysis | Oilseeds & Edible Oil

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

Stories in this Section
`Allow exotic shrimp imports'

Gold may test support level

Palm oil could test resistance, drop

Assocham plans agri training centres

Risk growing for a slight downtick in gold

Benchmark Mutual completes Gold BeES allotment

Karnataka tobacco crop size fixed at 95 mkg

Pepper futures may fall further

`Agriculture must be made a viable economic activity'