The Hindu Business Line : Palm oil futures to consolidate, rise

MALAYSIAN crude palm oil futures ended lower on Friday on robust volumes after coming close to testing the psychological resistance at 1,500 Malaysian ringgit (MYR) a tonne.

The third month active front month contract has moved higher as per our expectations till now. As mentioned earlier, an inverse-head-and-shoulder pattern is in the making with the neckline at 1,447-50 MYR/tonne levels.

Prices crossed the neckline point edging higher with one potential trend line target at 1,491 MYR/tonne being met. Expect prices to consolidate in a range and then rise further higher towards 1,566 MYR/tonne in the coming sessions or even higher towards 1,600 MYR/tonne.

Crucial support is at 1,445-50 MYR/tonne levels.

Only, an unexpected move below 1,408-10 MYR/tonne can cast doubts on this bullish view.

The move to 2,003 MYR/tonne is the end of the fifth wave impulse and a move lower from there is a corrective A-B-C pattern in the making.

We are possibly in a new impulse with the first wave of the impulse ending at 1,504 MYR/tonne and the second wave ending at 1,329 MYR/tonne.

We can now expect the explosive third wave to begin. Unexpected break below 1,400 MYR/tonne, will force us to abandon this count.

RSI is in the highly overbought zone indicating a correction lower in the offing. The averages in MACD are above the zero line in the indicator suggesting bullishness.

Prices are above the short-term 8-day period EMA at 1476 MYR/tonne and the 34-day period EMA is at 1,446 MYR/tonne. Therefore, look for palm oil futures to consolidate and rise higher.

Supports are at 1476, 1444 and 1428 ringgits. Resistances at 1500, 1523 and 1566 ringgits.

(The author is associated with the Multi Commodity Exchange of India Ltd. The views expressed in this column are his own and not that of his employer. 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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