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Malaysian palm oil futures ended mildly higher on Monday, after a volatile session that saw prices move both ways, post and pre MPOB official data release.
The decisive down tick on March 2, has opened the scope for more downside in the coming weeks. As mentioned in the previous update, intermediate supports could be seen at MYR 2,360-70 from where some retracement can be expected. Though prices have bounced off near those lows, a bottom still seems unlikely here. Near-term supports are at MYR 2,350, and MYR2,310-15 . A break below MYR 2,310 could take the prices lower to the MYR 2,185-2,255 zone. A rebound from this support cannot be ruled out. Any upticks to MYR 2,430-35 could cap upside attempts now. Only a strong break above MYR 2,500 could turn the outlook bullish. But that looks unlikely A fall to MYR 2,310-15 is more likely and a close below here could open the downside to even MYR 2,250 subsequently. We will now reassess the wave counts, as prices have crossed over above MYR 2,370-2,400. A possible new impulse looks to have started again. One of our targets at MYR 1,850 was met. The rally from there looks very impressive. As mentioned earlier, we expected prices to push higher towards MYR 2,645 initially and then correct lower in a corrective pattern towards MYR 2,425 or even lower to MYR 2,225, and then subsequently rise towards a medium to long-term target at MYR 3,600, which could bring this current impulse to an end. The medium to long-term expectation, that we have been having is slowly materializing and the impulse wave is underway. But, a short-term fall below MYR 2,800 now has caused doubts on our overall bullish expectations. The present up move from MYR 2,425 looks impulsive with potential targets around MYR 2,945-50 while MYR 2,585 holds. The equality target for the present up move lies around MYR 3,120-25. But, a fall below MYR 2,530 has changed the counts and we will review it in the next update.
Look for palm oil futures to test the above mentioned support levels in the coming sessions.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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