Malaysian palm oil futures on Bursa Malaysia Derivatives ended higher on Friday, on supply concerns due to floods in Malaysia and news of Indian imports, brushing away concerns over rising stockpiles and decreasing exports in Malaysia.

Market participants now await for data from the Malaysian Palm Oil Board in the coming week, which could provide further clues for direction.

Chinese demand for palm may also rise later this month as buyers stock up supplies ahead of the Lunar New Year at January-end. Crude palm oil active month futures are moving in line with expectations.

As mentioned in the previous update, any dips to 2,600-2,620 Malaysian ringgit a tonne (MYR/t) range is expected to hold for now and result in the uptrend to resume.

Prices were seen in an accumulation mode with decent volumes between 2,600-2,620 MYR/t throughout the week, preparing itself to rise higher towards 2,725-2,730 MYR/t or even higher to 2,750 MYR/t levels.

Supports are now at 2,625-2,630 MYR/t range.

Direct fall below 2,600 MYR/t could hint a failure to rally higher and a stronger corrective decline can be seen towards 2,525-2,530 MYR/t range.

Expect prices to touch or cross the psychological resistance at 2,700 MYR/t, while the 2,600-2,520 MYR/t support holds. As mentioned earlier prices met an intermediate wave target at 2,135 MYR/t and corrective decline to 2,345-2,350 MYR/t levels, followed by a sharp third wave move to 2,575-2,600 MYR/t materialised.

The potential third wave targets are near 2,750-2,800 MYR/t levels now.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold.

It is also showing a negative divergence hinting at a bigger corrective fall in the coming weeks.

The averages in MACD are above the zero line of the indicator hinting at a bullish to be intact. Only a crossover below the zero line again could again hint at weakness again.

Therefore, look for palm oil futures to test the supports and rise towards resistances.

Supports are at MYR 2645, 2620 and 2585 Resistances are at MYR 2685, 2720 and 2750.

(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at >gnanasekar.t@gmail.com .)

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