Comments
Malaysian palm oil futures on the Bursa Malaysia Derivatives ended sharply lower on Monday dropping to a nine-month low on weakness in the soya complex and a firm local currency. Crude palm oil futures were pressurised after the US Department of Agriculture forecast huge supplies ahead for soyabeans in the monthly report issued on Friday. Energy prices are also easing on signs of improving supplies and weak demand in consuming countries.
Palm oil active month September futures moved lower without the expected gains. As mentioned in the previous update, a move below MYR 2,375/tonne could hint at weakness again possibly targeting 2,250 on the downside. Several targets are seen being tested in the coming sessions. Initial support will be near MYR 2,265-75 followed by important support at 2,245-50 levels. Below here, the market could be inclined to test further lows near 2,185 levels too. As cautioned earlier, the trend looks still weak in the bigger picture and is expected to continue. However, indicators are in oversold territories warning of a possible profit-taking which could see an upward retracement towards 2,355-65 initially or could even extend towards 2,395-2,400 levels.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135/tonne and corrective decline to 2,345-50 levels, followed by a sharp third wave move to 2,575-2,600 . Price structures suggest a possible third wave move ending at 2,690 and a corrective, fourth wave with targets at 2,450 now. The fifth wave possibly ended at 2,898 and a corrective A-B-C in progress with an equality target now stretching to 2,185 levels now.
RSI is in the oversold zone now indicating a possible upward correction. However, the averages in MACD are still below the zero line of the indicator hinting at a bearishness to be intact. Only a crossover again above the zero line could at resumption in the bullish trend.
Therefore, look for palm oil futures to move lower initially and then rebound
Supports are at MYR 2,265, 2,245 and 2,185. Resistances are at MYR 2,365, 2,400 and 2,435.
(The author is the Director of Commtrendz Research and also in the advisory panel of Commodity exchanges and corporate houses. The views expressed in this column are his own. 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 .)
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.