Comments
Malaysian palm oil futures on the Bursa Malaysia Derivatives ended lower on Monday as the ringgit strengthened and the soy complex also fell lower.
Strong demand continues to underpin prices, but expectations of higher production and stocks continue to cap prices.
Prices also climbed to their highest since April 6 on Wednesday on worries an El Nino weather pattern would curb yields. 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.
Once a close above here could see prices revisiting MYR 2,300 levels or even higher. However, there is still no evidence of a clear bullish reversal yet. Important support is at 2,130-35 levels now. While this support holds, we can expect some upside in the short-term.
Charts are turning friendly and in the short-term, we can expect a gradual push higher towards levels mentioned above. A potential target lies at MYR 2,275 levels.
Only a decline below 2,100 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 MYR 2,400/tonne 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 2,175 levels.
This once again puts the spot light on the 1,700 mark, which we anticipated earlier.
We are now tracking a final leg of a impulse in a declining trend with potential targets near MYR 1,850/tonne 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 above the zero line of the indicator hinting at a bullish reversal.
Only a crossover again below 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 2,150, 2,120 and 2,080. Resistances are at MYR 2,200, 2,245 and 2,285.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.