Malaysian palm oil futures ended lower on Friday. Fears over abundant supplies in India and inflationary pressures in China, are adding to bearish sentiment. CPO's pullback to 3,430 Malaysian ringgit (MYR) a tonne or to 3,485 MYRcan be seen being a trend line resistance point. If prices continue to rise above 3,495-3,500 MYR, then we might see them rising towards 3,600 MYR. Prices may meet resistance in the 3,495-3,500 MYR zone. A rise and close above 3,495 MYR could open the way towards 3,650-70 MYR. Important supports are 3,245 MYR/ followed by 3,185 MYR now. We believe the impulse that began from 1,427 MYR, which hit 4,486 MYRended and a prolonged corrective move has possibly ended at 1,335 MYR. In the big picture, a new impulse began from 1,335 MYR and the third wave with a projected objective of 3,900 MYR has been met. Most probably a wave “A” target has been met. A corrective wave “B” targeting 3,625-3,700 MYR has also materialised. The present fall in the form of a wave “C” could have ended at 3,165 MYR. A rise above 3,670 MYR will confirm that a new impulse has begun. Else, we can still see the 3,100-105 MYR being tested on the downside subsequently. RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator indicating bearishness to be intact. Only a cross-over above the zero line could indicate a reversal in trend. Look for palm oil to test the resistance levels. Supports are at MYR 3,225, 3,185 & 3,130; resistances at MYR 3,375, 3,430 & 3,495.

(The author is the Director of Commtrendz Research and also on the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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