The Hindu Business Line : Palm oil may test support

Malaysian crude palm oil futures ended sharply lower on Friday declining more than six per cent in a single day due to market talk that Indonesia could delay its plan to raise vegetable oil export tax triggered panic selling. The indications are that we are in a good corrective retracement now, but it won't be surprising to see CPO futures making a shy at the recent high or even higher after this correction ends.

As long as 2665 Malaysian ringgit (MYT) a tonne caps advances, we can expect the correction to extend lower towards 2240 MYR/tonne levels. The first important fibonnaci retracement point comes in at 2240 MYR/tonne. As mentioned in the previous update, the ensuing fall could be equally strong on the downside, which is what we saw last week. Near-term support is at 2450 MYR/tonne, followed by more important support at 2240 MYR/tonne.

A new impulse began from 1427 MYR/tonne as per the recent wave counts. We are in the fifth wave move of that impulse. We can expect a corrective A-B-C to begin now. RSI is still in the overbought zone indicating the possibility a further corrective decline in the offing. The averages in MACD are still above the zero line in the indicator suggesting bullishness to be intact. Therefore, look for palm oil futures to test the support levels.

Supports are at MYR 2450, 2375 and 2240. Resistances are at MYR 2565, 2655 and 2685.

Gnanasekhar T.

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