Palm oil to test resistance

Gnanasekaar T | Updated on January 16, 2018 Published on October 31, 2016


Malaysian palm oil futures on the Bursa Malaysia Derivatives ended lower on Monday on declining exports, weakness in the soya oil futures and lack of any further bullish cues.

Exports of Malaysian palm oil products for October 1-31 fell 6.4 per cent to 1,288,894 tonnes in September, cargo surveyor Intertek Testing Services said.

CPO active month January futures are moving broadly in line with our expectations. As mentioned earlier, we are seeing adequate confirmation of a bullish reversal that has materialised. The medium- to long-term picture also continues to exhibit bullish tendencies.

Strong supports are now seen at MYR 2,750-65/tonne range followed by 2,730 levels and while supports hold, prices are expected to edge higher again towards important near-term resistance at 2,935-45 levels or even higher in the coming sessions.

A downward correction is expected after a test of 2,945-50 zone, failing which the rally could get wings to take out the psychological resistance at 3,000 levels also.

In the medium-term picture, there is scope for this uptrend to turn into a very strong one even targeting 3,120-3,200 levels. But, this could happen only after some corrective declines.

Favoured view expects a minor consolidation in the 2,700-2,800 range followed by a strong rally higher again. Unexpected decline below 2,720 could postpone the bullishness.

Such a fall could see stronger supports around 2,665-70 on levels being a very important medium-term support level.

Wave counts: 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 3,125 , 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 under way. We have maintained for several weeks now that any dips could prove to be opportunity to participate in the upcoming uptrend.

However, the picture could turn weak if prices unexpectedly went below 2,400 levels now.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are 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 weakness again.

Therefore, look for palm oil futures to test the resistance levels.

Supports are at MYR 2,750, 2,720 and 2,670. Resistances are at MYR 2,820, 2,900 and 2,945.

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

Published on October 31, 2016

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.