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Malaysian palm oil futures on the Bursa Malaysia Derivatives ended lower on Monday after Indonesia said it would delay the implementation of export levies, although strong export sales by Malaysia checked losses.
Exports of Malaysian palm oil products for May 1-25 rose 52.9 per cent to 1,382,782 tonnes from 904,112 tonnes shipped during April 1-25, cargo surveyor Intertek Testing Services said on Monday. Traders are also keeping a watch on the US soya crop progress.
CPO active month August futures are consolidating and building itself for the next move. As mentioned earlier, price structures now suggest a possible upside rally in CPO futures towards MYR 2,250-55 /tonne levels, where it is expected to find strong resistance. Prices came close to testing the resistances and then moved lower again.
As we have been maintaining, there is still no evidence of a clear bullish reversal yet. Important support is at 2,105-10 levels now.
While this support holds, we can expect some upside again in the short-term. A potential short-term target lies at 2,275 levels. Strong resistance will be seen at 2,165-75 levels.
While supports hold, we are hopeful of a minor upside in the short-term, while we are still tracking weakness in the big picture charts. Only a decline below 2,085, could hint at weakness now, and such a move could revive bearish expectations again and revive hopes of a test of medium-term targets at 1,900 levels.
We will have to once again review the wave counts, but will wait for a crossover above 2400 to do that. Till then we will stick to our earlier assessment.
As mentioned earlier, a downtrend again could be confirmed on a close below MYR 2,175/tonne levels. This once again puts the spot light on the MYR 1,700/tonne mark, which we anticipated earlier.
We are now tracking a final leg of a impulse in a declining trend with potential targets near 1,850 or even lower to 1,700 levels. Ideally, the next leg of a larger up move could potentially begin from this area.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone below the zero line of the indicator again hinting at a bearish reversal. Only crossover again above the zero line could hint at a resumption of the bearish trend.
Therefore, look for palm oil futures to consolidate and rise towards resistance levels.
Supports are at MYR 2,120, 2,080 and 2,015. Resistances are at MYR 2,175, 2,200 and 2,245.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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