Malaysian palm oil futures on the Bursa Malaysia Derivatives ended higher on Monday supported by rising demand and rebounding soya prices. Exports of Malaysian palm oil products for July rose 15.4 per cent to 1,283,050 tonnes from 1,111,413 tonnes shipped during June, cargo surveyor Societe Generale de Surveillance said.

CPO active month October futures are moving in line with our expectations. As mentioned earlier a direct rise above MYR 2,350/tonne on a closing basis could hint at resumption of the uptrend, which could potentially stretch to test 2,450 levels, or even higher. There is no confirmation of an uptrend yet, but some positive signs are emerging.

After a sharp decline that continued from 2,677 levels and ended at 2,186 levels, the present move looks like a possible retracement with targets near 2,435-35 levels, which also happens to be confluence point, where multiple resistances merge. Nearer supports are now at 2,305 followed by 2,285 levels. Failure to hold supports here could hint at further weakness ahead. In the bigger picture, fall below 2,240 could aim for 2,088-90 levels on the downside before finding good support from there.

However, the present rally has scope to push higher towards 2,400-2,435 levels, where good resistance is expected again. This is our favoured expectation.

A direct rise above 2,355 on a closing basis could hint at resumption of the uptrend, which could potentially stretch to test 2,420-35 levels, or even higher in the coming sessions.

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.

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 , which could bring this current impulse to an end.

The medium- to long-term expectation we have been having is slowly materialising and we will watch for any signs of a possible impulse wave in the making. Any dips could prove to be opportunity to participate in the upcoming uptrend. However, the picture could turn weak below MYR 2,200/tonne levels. RSI is in the neutral zone now indicating that it is neither oversold nor overbought.

As mentioned in the earlier updates, the averages in MACD are still below the zero line of the indicator hinting at a bearish reversal in trend. Only a crossover again above the zero line could hint at a bullish reversal in trend.

Therefore, look for palm oil futures to consolidate and rise again.

Supports are at MYR 2,305, 2,285 and 2,250. Resistances are at MYR 2,335, 2,375 and 2,425.

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

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