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Malaysian palm oil futures on the Bursa Malaysia Derivatives ended higher on Monday helped by a spike in energy futures. However, disappointing export data for the first half of the month capped gains. Exports of Malaysian palm products for June 1-15 fell close to eight per cent as estimated by cargo surveyors. Crude palm oil active month September futures moved higher as expected. As mentioned in the previous update, while MYR 2,375/tonne holds, chances exist for a move up to MYR 2,485-2,500 levels in the coming sessions. Near-term resistances are at 2,450 followed by 2,485. Soya oil technicals are turning friendly and this could have a positive effect of palm oil futures as well. Therefore, we favour an upside move in palm oil futures in the coming sessions.
Supports are seen at MYR 2,420/tonne followed by MYR 2,385-95/tonne levels. Only a decline below MYR 2,360/tonne could turn the picture weak opening the downside. Favoured view expects prices to hold supports and rise towards 2,485 initially and then towards 2,550.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135/tonne and corrective decline to 2,345-50, followed by a sharp third wave move to 2575-2600materialised. Price structures suggest a possible third wave move ending at MYR 2,690/tonne and a corrective, fourth wave with targets at 2,450 now. The fifth wave possibly ended at MYR 2,898 and a corrective A-B-C in progress with an equality target at 2,350 now.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. It is also indicating a positive divergence, where prices are making lower lows not confirmed by lower lows in the indicator. The averages in MACD are still below the zero line of the indicator hinting at a bearish reversal. Only a crossover again above the zero line could at resumption in the bullish trend.
Therefore, look for palm oil futures to consolidate and rise.
Supports are at MYR 2,420, 2,385 and 2,350. Resistances are at MYR 2,455, 2,485 and 2,550.
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