Comments
Malaysian palm oil futures on the Bursa Malaysia Derivatives ended lower on Monday but managed to climb smartly from intra-day lows with good volumes.
Palm oil’s demand outlook has brightened, thanks to an export duty cut in Malaysia and a possible peaking of production months.
Palm oil exports rose 21.2 per cent to 996,065 tonnes for September 1-20 compared with the same period a month ago, cargo surveyor Intertek Testing Services saidAnother cargo surveyor Societe Generale de Surveillance on Monday showed that exports for the same period rose 26 per cent. .
CPO active month December futures bounced are moving in line with our expectations. As mentioned in the previous update, extremely oversold conditions warn us of possible retracement in the coming sessions.
As expected we saw the retracement coming close to MYR 2,200/tonne levels. The subsequent decline now looks to be contained in the 2,065-75 range.
Further scope exists for a fall towards 2,045 range. Our favoured view expects support mentioned above to hold and prices to make an attempt to clear recent highs at MYR 2,175 and test MYR 2,235 or even higher at MYR 2,300 levels.
Only a fall below MYR 2,005/tonne could cause doubts on our short-term bullish view and such a decline could take prices lower towards the recent low of 1,914 levels again.
As mentioned earlier, a corrective A-B-C in progress with an equality target now stretching to MYR 2,135/tonne 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 are still below the zero line of the indicator hinting at bearishness to be intact.
Only a crossover again above the zero line could hint at resumption in the bullish trend. Therefore, look for palm oil futures to test the support levels and then rise again.
Supports are at MYR 2,045, 2,005 and 1,975. Resistances are at MYR 2,150, 2,195 and 2,235.
The writer is the Director of Commtrendz Research. There is a 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.