Comments
Malaysian palm oil futures on BMD ended lower Monday, erasing gains made in the last few trading sessions on slowing demand and rising stockpiles. This was despite the Soy complex rising overnight, due to better export demand from China. CPO active month January futures are moving on expected lines.
As expected supports held for a retest of recent highs around 2,375 MYR/tonne levels. Though the bigger picture has turned neutral to bullish, momentum is still weak and therefore unable to follow-through higher. Strong support will be seen at 2,295 levels followed by crucial support at 2,260 , and this level is very important to keep the bullish trend intact.
While the above supports hold, a potential technical target is near 2,645 post the resistance at 2,500-30 .
Any rallies to 2,350-75 zone could be short-lived and favoured view expects prices to edge lower initially towards 2,260 followed by 2,215 levels. Only an unexpected rise above 2,380 could hint that the expected corrective decline might not materialise.
Such a rise could open the upside towards 2,445-50, which is not our favoured view.
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.
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 have gone above the zero line of the indicator hinting a bullish reversal. Only a crossover again below the zero line could hint at a resumption of the bearish trend.
Therefore, look for palm oil futures to test the support levels and rise higher.
Supports are at MYR 2,295, 2,260 & 2,210 Resistances are at MYR 2,355, 2,380 & 2,420.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.