• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Malaysian palm oil futures ended lower on Friday erasing early gains as the market moved in a volatile range closing the week on the lower side. Slowing demand is adding pressure to increasing stocks. However, a pick up in exports lately has provided support. Indian importers have been rushing to take deliveries due to the anticipation of an import duty hike. However, prices could find support now due to the implementation of a mandatory bio-diesel blend. The differentials between soya oil and palm oil are also highly in favour of palm and production unlikely to rise further due to falling yields.

CPO futures are consolidating in line with our expectations. A bearish bias continues as the overall trend continues to be bearish. No change in view. Important resistance now lies at 1,725 Malaysian ringgit (MYR) a tonne (MYR/tonne) levels. Another important resistance lies at 1901 MYR/tonne beyond this. Presently, we anticipate a consolidation between 1,450-1,675 MYR/tonne and break higher. Possibility of a test of 2,077 MYR/tonne cannot be ruled out being a fibonnaci retracement point as shown in the chart above. This is our favoured expectation. However, failure to cross the recent high at 1,725 MYR/tonne and a break below 1400 MYR/tonne could once again drag prices lower towards recent lows or even lower. The A new impulse began from 1,427 MYR/tonne and this could be the third wave, which has at 4486 MYR/tonne. A prolonged corrective fourth wave in the form of A-B-C is in progress now. Believe we could be in a wave “C” with possible targets extending even lower towards 1600 MYR/tonne. RSI is in the neutral zone now, indicating that it is neither oversold nor overbought. The averages in MACD are still below the zero line of the indicator indicating overall bearishness to be intact. Therefore, look for palm oil futures to consolidate and rise higher subsequently.

Supports are at MYR 1430, 1395 and 1330. Resistances are at MYR 1565, 1689 and 1725.

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

Copyright © 2008, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line