Malaysian palm oil futures on the Bursa Malaysia Derivatives hit a 23-month high on Monday, driven by lower expected production and improving export demand.

Exports of Malaysian palm oil products for March 1-20 rose 23.2 per cent to 717,670 tonnes, cargo surveyor Societe Generale de Surveillance said. CPO active month June futures moved perfectly in line with our expectations.

As mentioned in the previous update, as the trend still remains strong both on the short-term and medium-term, we expect supports to hold again and edge higher again.

As expected supports levels held and then prices rose higher again towards our next technical objective near MYR 2,690-2,700/tonne levels. Further upside to a potential equality target at 2,800-15 is possible in the coming months.

But, for that to happen, prices need to correct lower or consolidate in a trading range for a while taking a breather. Supports are at 2,630 followed by 2,585 .

Only an unexpected decline below 2,540-50 levels, also being a rising trend line support point, could cause doubts on our bullish view. Such a fall though not expected could see prices drifting lower again towards 2,460-65 levels where strong supports are noted again.

Though, any corrections could see rapid selling pressure, the trend remains strongly bullish and such dips could prove to be short-lived.

We will now reassess the wave counts, as prices have crossed over above 2,370-2,400 . 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. The current move could push higher towards 2,645 initially and then it could correct lower in a corrective pattern towards 2,310 or even lower to 2,250, and then subsequently rise towards a medium to long-term target at 2,900, which could bring this current impulse to an end. But, this is clearly a medium to long-term expectation and not to be mistaken for a short-term view. Any dips could prove to be opportunity to participate in the upcoming uptrend.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. As mentioned in the earlier update, the averages in MACD are above the zero line of the indicator hinting a bullish trend to be intact.

Only a crossover again below the zero line could hint at a reversal in trend to bearish.

Therefore, look for palm oil futures to test the resistances and then slide.

Supports are at MYR, 2,650, 2,620 and 2,575. Resistances are at MYR 2,710, 2,745 and 2,800.

The writer is the Director of Commtrendz Research. There is risk of loss in trading.

Related Topics
comment COMMENT NOW