Malaysian palm oil futures on the Bursa Malaysia Derivatives ended higher on expectations there would be higher demand from the world’s biggest edible oil importer.

CPO active month December futures have been moving perfectly in line with our expectations. As mentioned earlier, a close above MYR 2,675-80 levels could see prices testing 2,725/tonne, another significant resistance, followed by 2,765.

A breakout could trigger a major bullish trend going forward. Prices broke out of a broad consolidation in the 2,650-2730 range ahead of the Globoil conference.

The price structures hint only at further scope to rise higher and any price declines may get well supported again. Very strong support is seen at 2,645-50 levels followed by 2,620 levels now, being a rising trend line support levels.

As illustrated earlier, the bigger picture has gradually turned friendly and shows bullish tendencies, and now, we are seeing adequate confirmation of a bullish reversal that has materialised. While the supports mentioned above hold well, strong resistance at 2,760-70 is expected to be tested in the coming sessions.

In the medium-term picture, there is scope for this uptrend to turn into a very strong one, even targeting 3,200 levels. But, this could happen after a downward correction subsequent to testing of the abovementioned targets.

Only an unexpected decline below 2,600 could dash our bullish hopes and turn the picture neutral again.

Wave counts: A possible new impulse looks to have started again. One of our targets at 1,850 was met.

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 2,900-2,925, which could bring this current impulse to an end.

We have maintained for several weeks now that any dips could prove to be an opportunity to participate in the upcoming uptrend. However, the picture could turn weak if prices unexpectedly went below 2,400.

RSI is in the neutral zone now, indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator, hinting at a bullish reversal in trend. Only a crossover again below the zero line could hint at fresh weakness.

Therefore, look for palm oil futures to test the resistance levels and correct lower subsequently.

Supports are at MYR 2,660, 2,620 and 2,575. Resistances are at MYR 2,760, 2,790 and 2,825.

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

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