Commodities

MCX Crude Palm Oil resumes its uptrend

Yoganand D | Updated on January 17, 2018 Published on July 20, 2016

BL21-OIL-2





Crude Palm Oil (CPO) futures contract traded on the Multi Commodity Exchange (MCX) has been in the limelight over the past six trading sessions.

Taking support at around ₹490 per 10 kg, the contract has gained 2 per cent last week. The contract has formed a bullish engulfing candlestick pattern which is a bullish reversal pattern.

This bullish impetus continued and the contract has surged about 2 per cent breaching the 21-day moving average as well as a resistance at ₹510 in the first two trading sessions of the week.

On Wednesday, the contract gained ₹4.1 or 0.8 per cent to trade at ₹518.

The recent rally from the support around ₹490 confirms the end of the medium-term downtrend that was in place from the April peak of ₹578.

Current rally has decisively breached the down trend-line and an immediate resistance at ₹510.

Short-term view: After retracing 38.2 per cent fibonacci retracement level of the prior uptrend that began from the August 2015 low at ₹351, the contract found support at ₹490 last week.

Subsequently, the contract reversed direction from this support forming a bullish engulfing candlestick pattern.

The positive divergence in the daily indicators such as relative strength index and price rate of change also backs the reversal. Buy the contract in dips with a stop-loss at ₹496.

The contract can extend its up move and encounter resistance at ₹530 in the short term. Key immediate supports are at ₹500 and ₹490.

Medium-term view: Since August 2015 low at ₹351, the contract has been on a long-term uptrend.

Strong breakthrough of ₹530 will confirm the resumption of the uptrend and take the contract higher to ₹550 and ₹580 levels.

Key supports below ₹490 are at ₹470 and ₹450 levels.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

Published on July 20, 2016
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