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Malaysian palm oil futures on the Bursa Malaysia Derivatives ended higher on Monday on expectations of better exports for September and a weakening ringgit.
Cargo surveyors reported last week that exports had already reached 1.3 million tonnes as of Thursday, sending prices higher.
CPO active month December futures are moving perfectly in line with our expectations. As mentioned in the previous update, the decline now looks to be contained in the MYR 2,065-75 a tonne range and expect support to hold and prices to make an attempt to clear recent highs at 2,175.
Prices could now see a consolidation in the 2,145-50 and 2,195-2,200 range and then breakout higher towards MYR 2,235/tonne or even further up at 2,290/2,300 levels.
Only a fall below 2,100/tonne levels could cause doubts on our short-term bullish view and such a decline could take prices lower towards next important support at MYR 2,055-65/tonne levels again. Only a close below 2,035 could have bearish implications again.
Expect prices to move higher again towards 2,200 levels or even higher while supports mentioned above hold.
As mentioned earlier, a corrective A-B-C in progress with an equality target now stretching to 2,135 levels or even lower.
With the present structures, there is a good chance that we could be in a five wave impulse moving lower with equality targets near 1,700 levels.
The present decline has targets near 1,845 levels from where a strong retracement could commence.
Despite, a minor retracement, 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 resumption in the bearish trend.
Therefore, look for palm oil futures to consolidate and test the resistance levels.
Supports are at MYR 2,145, 2,100 and 2,055. Resistances are at MYR 2,198, 2,225 and 2,285.
The author is the Director of Commtrendz Research and there is risk of loss in trading.
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