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Malaysian palm oil futures ended higher on Friday in choppy trade ahead of the weekend. Holidays in the coming week is also keeping traders away from taking any positions.

Markets are awaiting fresh leads from a vegetable oils conference in Mumbai held during the weekend, during which analysts including London-based Dorab Mistry will give their price outlook for 2008-09.

Energy markets are moving in a range providing no clear direction for the edible oil markets.

CPO futures are consolidating in line with our overall expectations, preparing for the move up towards 2500 Malaysian ringgits (MYR) a tonne.

There are chances of this move to extend beyond that and possibly even test 2645 MYR/tonne.

Currently, the base is being formed at 2,250 MYR/tonne for the next move up.

We can now expect a bounce higher towards 2400 MYR/tonne, being an important resistance point. Initial resistance will be at 2525 MYR/tonne.

We expect prices to pause here and consolidate for sometime.

However, unexpected fall below 2145 MYR/tonne could cause doubts on our bullish view.

And such a fall has the potential to test 1935 MYR/tonne or even lower towards 1870 MYR/tonne, which we do not favour.

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 extending to 2250 MYR/tonne.

RSI is in the neutral zone now, indicating that it is neither overbought nor oversold.

It is also displaying a positive divergence, a possible sign of bullish reversal.

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 rise higher.

Supports are at MYR 2250, 2145 and 2020. Resistances are at MYR 2400, 2525 and 2645.

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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