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Malaysian palm oil futures on the Bursa Malaysia Derivatives ended higher on Monday supported by a weakening ringgit, although lacklustre export demand continued to pressure prices.
Exports of Malaysian palm oil products fell 4.5 per cent to 598,269 tonnes between November 1-15 compared with the same period a month ago, cargo surveyor Intertek Testing Services showed.
CPO active month February futures are inching lower with a mild bearish bias.
As mentioned in the previous update, despite the present sharp decline from the highs of MYR 2,345/tonne, and test of important supports, the big picture charts are yet to show a convincing reversal in trend.
The important support level at the crucial 2,180-95 range has to be convincingly broken, being a trend line support zone.
However, the charts for soya oil are displaying weakening signs and this could rub off sooner or later on CPO futures.
A close below MYR 2,175/tonne could dash our bullish hopes and such a fall could see prices heading towards 2,100 levels or even lower to 2,050 levels in the coming sessions.
Favoured view expects prices to get supported near MYR 2,180-95/tonne range.
Failure to hold support here result in a sharp decline towards levels mentioned above.
As mentioned earlier, we are now more inclined to an impulsive move towards 2,295-2,300 levels or even higher to 2,410. This could either be a corrective move within a larger downtrend.
Only a rise above 2,600 could revive hopes of a new impulse, which can carry prices much higher towards 2,900/tonne. This could be a beginning downtrend again and such a move will be confirmed on a close below 2,175 levels.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold.
The averages in MACD are above the zero line of the indicator hinting at a bullish reversal.
Only a crossover again below the zero line could hint at resumption in the bearish trend.
Therefore, look for palm oil futures to test the supports levels.
Supports are at MYR 2,210, 2,185 and 2,130. Resistances are at MYR 2,255, 2,285 and 2,345.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.
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