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Malaysian palm oil futures ended lower on fears of slowing demand and losses in other related oils.
CPO active month July contract are seen moving in a broad range. As mentioned earlier, the previous lows around MYR 2,350/tonne could offer minor support. Once lower , the decline could accelerate towards 2,310-15 being the next support. Only a decisive fall again below 2,310 could see further declines to 2,185-2,255 zone too, from where a strong rebound or a possible bottom is likely subsequently. With the trend still bearish, we can expect prices to break lower after the consolidation ends.
The favoured view expects that while upticks to 2,450 or even higher to 2,480 caps, we can expect more downside towards 2,310 or even lower to 2,275 . As we have been maintaining, we are still of the view that that the underlying bigger trend continuing to be bearish, any upticks or unexpected rallies could be short-lived and prices may decline subsequently. However, only a close above 2,480 could revive bullish hopes, which is not our favoured view now.
Wave counts: A possible new impulse looks to have started again. One of our targets at 1,850 was met. The rally from there looks very impressive. We expected prices to push higher towards 2,645 initially and then correct lower towards 2,425 or even lower to 2,225 , and then subsequently rise towards a medium- to long-term target at 3,600 , which could bring this current impulse to an end. Only a close above 2,640 could alter the wave counts again, which is not our favoured scenario now.
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 a bullish reversal again.
Therefore, look for palm oil futures to test the support levels now.
Supports are at MYR 2,380, 2,350 and 2,310. Resistances are at MYR 2,435, 2,475 and 2,510.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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