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Malaysian palm oil futures ended sharply higher on Friday on strong festival demand. Palmoil demand was high with Ramadan underway followed by Diwali. The market’s focus is now turning to palm oil export data for September 1-15, due for release by cargo surveyors next week. Energy prices reaching all-time highs have also added support for the CPO futures. CBOT Soyoil futures had an extremely strong finish on Friday, which will further bolster sentiment for palm oil f utures next week.

CPO active month contract moved higher and tested the resistance levels as expected. Resistance at 2,550-60 myr/tonne levels has been taken out opening the way for 2,650 myr/tonne initially, where it is expected to find good resistance. Supports are now at 2,545 myr/tonne and 2,516 myr/tonne and ideally these levels are expected to hold supports. However, an unexpected fall below these support points could arrest the bullishness.

A new impulse began from 1,427 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 after the current impulse ends.

RSI is in the overbought zone indicating that a minor correction is in the offing. Minor Negative divergences are also seen in the indicator cautioning against aggressive longs.

The averages in MACD are below the zero line in the indicator bearishness to be intact. Therefore, look for palm oil futures to test the resistance levels and correct lower subsequently.

Supports are at 2,545, 2,510 and 2,465 ringgits. Resistances are at 2,650, 2,698 and 2,761 ringgits.

Gnanasekar T.

(The author is the Director at Commtrendz Research and also 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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