The Hindu Business Line : Palm oil may turn bearish soon

Malaysian crude palm oil futures ended lower on Friday weighed down by losses in CBOT soya oil and a higher build up in stocks. Malaysia’s crude palm oil output rose 16.34 per cent to 1,356,967 tonnes in July from a revised 1,166,370 tonnes a month earlier, official crop agency Malaysian Palm Oil Board said on Friday. However, exports have been on the risea. CPO active month contract is down in line with our expectations. As mentioned in the previous update, the cont ract is now displaying some bearish tendencies. A failure to surpass 2595 Malaysian ringgit (MYR) a tonne could lead to a bearish head-and-shoulder pattern being formed targeting 2,200 MYR/tonne levels again. This could be a possible scenario if prices fail to garner momentum, however, a rise above 2592 MYR/tonne will rekindle hopes of a test of the psychological 3000 MYR/tonne levels, which looks quite remote now. A new impulse began from 1427 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 neutral zone indicating that it is neither overbought nor oversold and has started showing signs of minor negative divergence indicating bearishness to set in soon and caution against aggressive longs. The averages in MACD are still above the zero line in the indicator suggesting bullishness to be intact. Therefore, look for palm oil futures to test the support levels and then rise higher again.

Supports are at 2452, 2410 and 2325 ringgits. Resistances are at 2595, 2625 and 2745 ringgits.

Gnanasekar. 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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