The Hindu Business Line : Palm oil may test support, rise

Malaysian palm oil futures ended lower on Friday due to negative leads from the soya oil and the energy complex. Higher production and waning exports are weighing on prices. Malaysia would need to export more palm oil compared to prior months to offset rising production and diminish stock levels. SGS (Malaysia) Bhd., estimated exports for the month of July at 1.39 million tonnes, up 26.2 per cent on month. After falling below the psychologically important 3000 Malaysian ri nggit/tonne level and the festival season looming large, buying interest could set in sooner or later.

CPO active contract moved perfectly in line with our expectations. The diagonal pattern we have been tracking has been broken and has tested some key supports so far, but have not shown any clear signs of a reversal yet. Only a direct rise above 3054 Malaysian ringgit (MYR) a tonne could induce some bullishness ahead. Crucial support is at 2825 MYR/tonne being an important fibonnaci retracement point as seen in the chart above. Failure to find support here could ultimately drag it lower towards 2495-2500 MYR/tonne levels also an equality wave target. 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 in progress now. Believe we could be in a wave “C” with possible targets near 2500 MYR/tonne. RSI is in the oversold zone now, indicating that a possible correction is due. The averages in MACD are still above the zero line in the indicator indicating bullishness to be intact. Therefore, look for palm oil futures to test the support levels and rise higher subsequently.

Supports are at MYR 3025, 2978 and 2850. Resistances are at MYR 3125, 3205 and 3300.

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.)

More Stories on : Technical Analysis | Oilseeds & Edible Oil

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

Stories in this Section
Spot rubber declines on global cues

Palm oil may test support, rise

Rising cotton prices give apparel retailers a tough time

Quality norms for onion exports tightened