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Malaysian palm oil futures declined on Monday after the release of weaker export data, while March output is expected to improve from a month ago.
CPO active month June futures pulled back higher from recent lows.
As mentioned before, a break below 2,820 MYR/tonne on the active third-month contract triggered a wave of selling in CPO futures and it will act as a strong resistance barrier in the coming sessions.
Prices are unable to cross this near-term resistance. Only, a close above 2,900 could reignite bullish hopes again. Critical support is at 2,685-95 and failure to hold here could drag prices lower to the next important support around 2,490-2,510.
This happens to be a long-term rising trend-line support level. Once, it finds an intermediate bottom in the above mentioned range, ideally prices could pull back towards resistance points in the 2,895-2,900 zone again.
As illustrated in the earlier update, though, it looks like the short to medium-term has turned bearish, the bigger picture still favours bullishness ahead. The big picture still indicates neutral tendencies and a chance of a revival in the bullish trend from critical support points.
The short-term momentum has turned clearly bearish, so abandon any hopes of upward rallies anytime soon. Any uptick is expected to find strong resistance around the 2,810-20 band. We will now reassess the wave counts, as prices have crossed over above 2,370-2400. 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. As mentioned earlier, we expected prices to push higher towards 2,645 initially and then correct lower in a corrective pattern towards 2,460 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.
The medium to long-term expectation that we have been having is slowly materialising and the impulse wave is underway. But, a short-term fall below 2,800 levels now has cast doubts over our overall bullish expectations.
We will have to closely watch the important resistance points in the 2,900-3,000 band for any directional call going forward. RSI is in the neutral zone now, indicating that it is neither oversold nor overbought.
The averages in MACD are below the zero line of the indicator hinting at a bearish reversal in trend. Only a crossover again above the zero line could hint at a bullish revival now.
Therefore, look for palm oil futures to test the support levels.
Supports are at MYR, 2,725, 2,685 & 2,525. Resistances are at MYR 2,825, 2,900 & 3,010.
The writeris the Director of Commtrendz Research. There is risk of loss in trading.
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