Malaysian palm oil futures fell more than 1 per cent on the Bursa Malaysia Derivatives, charting a second straight session of losses as they tracked declines in crude oil and soya oil prices on the US Chicago Board of Trade.

Prices could not sustain above MYR 2,235/tonne levels. Prices broke the previous double bottom support at 2,140 , but managed to hold on to hose levels again bouncing from 2,137 . Important support is now at 2,150-60. A break below here could open the downside for 2,110-15 levels where a long-term rising trend support kicks in. A close above 2,300 MYR/ton levels could reinforce bullish expectations and alter the bearish picture.

For now, we favour resistance to kick-in around MYR 2,210-40 and cap upside attempts. The existing broad consolidation could continue between 2,110 and 2,240 in the coming sessions.

As per the price structure, a break below 2,110 seems possible with potential targets around 1,870 on the downside.

Wave counts: 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.

We expected prices to push higher towards 2,645 and then correct lower to 2,100 and then subsequently rise towards a medium- to long-term target at 3,600, which could bring this current impulse to an end.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator hinting at bearish to be intact.

Only a crossover again above the zero line could hint at a bullish reversal.

Therefore, look for palm oil futures to test support levels. Supports are at MYR 2,150, 2,110 and 2,000. Resistances are at MYR 2,195, 2,240 and 2,300.

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

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