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Malaysian crude palm oil futures ended marginally lower on Friday as market participants used the sharp fall to do some bargain hunting towards the close. Long-term demand for palm oil in food and bio-diesel looks robust despite the recent global jitters. Asian vegetable oil demand has been robust too ahead of the festival season. However, the Indian Government concerned over inflationary expectations is keeping a close watch and could intervene to check prices. Palm oil&# 8217;s slide this week, was triggered by statements from the influential analyst Mr. Dorab Mistry, who anticipated that recent high prices could cut Indian import demand sharply.

CPO active month contract has tested some of the important near-term support levels. Prices are showing signs of bouncing back higher this week towards 2478 Malaysian ringgit (MYR) a tonne levels, as long as 2315 MYR/tonne holds downside attempts. As mentioned in the previous updates, failure to surpass 2595 MYR/tonne lead to a bearish head-and-shoulder pattern being formed targeting 2,200 MYR/tonne levels again. This fall has squashed hopes of a test of 3000 MYR/tonne levels. Important support is now at 2250 MYR/tonne levels. Only a rise above 2550 MYR/tonne could rekindle bullish hopes again. 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 MYR 2325, 2285 and 2210. Resistances are at MYR 2410, 2478 and 2595.

(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 p rice movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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