The Hindu Business Line : Palm oil may test resistance level

Malaysian palm oil futures rose sharply higher on Friday towards the close, on hopes that an industry conference would bolster bullish hopes again. Record crude oil prices and strike by Argentina farmers is also seen underpinning prices. Argentine farmers opposed to a hike in export taxes on Thursday extended a strike in one of the world’s leading agricultural producers, deepening a political crisis. Exports from India, China and Pakistan are expected to be robust.

Surveyor Societe Generale de Surveillance said exports during the same period rose 4.7 per cent to 660,331 tonnes.

CPO active contract moved in line with our expectations. Important resistance is in the 3650 Malaysian ringgit/tonne zone now followed by 3700 MYR/tonne. Failure to surpass these levels could lead to loss of confidence and a huge fall below 3000 MYR/tonne can be expected. As mentioned in the previous update, price structures still favour bullishness as long as supports at 3275 or even lower to 3210 MYR/tonne levels hold. The trend line resistance point at 3454 MYR/tonne, will now tend to support any attempts to decline. The wave counts need a complete re look, as the present move has altered most of the big picture counts we have been tracking so far. A new impulse began from 1427 MYR/tonne and this could be the third wave which has not ended so far. We can expect a corrective fourth wave in the form of A-B-C to have begun now.

RSI is in the neutral zone now, indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line in the indicator indicating bullishness to be intact. Therefore look for palm oil futures to test the resistance levels.

Supports are at MYR 3505, 3454 and 3370. Resistances are at MYR 3650, 3705 and 3865.

Gnanasekaar .T

(The author is the Director of 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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