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Malaysian palm oil futures on BMD ended lower on Monday due to tepid demand amid higher production, although a mildly weaker ringgit supported prices. Exports of Malaysian palm oil products for November 1-20 were up 4.3 per cent to 970,057 tonnes over a month. CPO active month February futures moved lower as expected. Prices have been gradually declining, but have not given up the bullish picture yet. As mentioned in the previous update, price structures now hint at a fall to 2,215-30 MYR/tonne levels in the coming sessions. Intermediate supports are at 2,260-65 levels. Good support will be seen at these levels. However, failure to hold support here could see prices dropping to 2,215-20 levels. Only a close below here could further push prices even lower to 2,145 levels. As mentioned earlier, we feel 2,200-20 levels could hold and prices could once again attempt to rise . This is still our favoured view. Only an unexpected decline below 2,200 could hint that the expected rise from supports might not materialise. Such a decline could open the downside again targeting 2,140 levels or even lower to 1,995 levels in the medium-term picture. We will now reassess the wave counts, as prices have crossed 2,370-2,400 . 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. The current move could push higher towards 2,645 initially and then it could correct lower in a corrective pattern towards 2,310 or even lower to 2,250 , and then subsequently rise towards a medium to long-term target at 2,900 , which could bring this current impulse to an end. But, this is clearly a medium to long-term expectation and not to be mistaken for a short-term view. Any dips could prove to be opportunity to participate in the upcoming uptrend. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. As mentioned in the earlier update, the averages in MACD are above the zero line of the indicator hinting a bullish trend to be intact. Only a crossover again below the zero line could hint at a reversal in trend to bearish.
Therefore, look for palm oil futures to test the support levels and rise again.
Supports are at MYR 2,265, 2,220 & 2,145 Resistances are at MYR 2,325, 2,355 & 2,397.
The writer is the Director of Commtrendz Research. There is risk of loss in trading
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