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Malaysian palm oil futures ended slightly higher on Monday supported by improving export demand.
AmSpec Agri Malaysia reported on Monday that Malaysian palm oil shipments rose 9.5 per cent between March 1 and 25 versus the same period last month.
Expectations of rising production for March could also weigh on sentiment.
CPO active month June contracts are moving in a broad range now. Prices continue to display volatile tendencies. As mentioned earlier, intermediate supports could be seen at MYR 2,360-70/tonne from where some retracement can be expected in the coming sessions. Near-term supports are at 2,400-10 followed by 2,350-60 in the coming sessions.
Failure to hold supports here could take prices lower to 2,185-2,255 zone too, from where it can rebound subsequently.
Any upticks to MYR 2,450-55/tonne could cap the upside attempts now. Only a direct rise and close above here could take prices higher towards 2,525-35 again being a strong resistance levels.
Only a close above 2,540 could revive bullish hopes, which is not our favoured view now.
The favoured view now expects that while 2,465 caps the upside, we can expect more downside to 2,310-15 and a close below here could open the downside to even 2,250 subsequently.
Wave counts: A possible new impulse looks to have started again. One of our targets at MYR 1,850 was met. The rally from there looks very impressive.
We expected prices to push higher towards 2,645 initially and then correct lower towards 2,425 or even lower to 2,225 and then subsequently rise towards a medium- to long-term target at MYR 3,600/tonne. The present up move from 2,425 looks impulsive with potential targets around 2,945-50, while 2,585 holds.
The equality target for the present up move lies around 3,120-25 MYR/tonne . But a fall below 2,530 has changed the counts and we will review it in the next update.
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 bearishness to be intact.
Only a crossover again above the zero line could hint at a bullish reversal again.
Therefore, look for palm oil futures to test the resistance levels and then decline again.
Supports are at MYR, 2,410, 2,360 and 2,310. Resistances are at MYR 2,465, 2,535 and 2,570.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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