Malaysian palm oil futures closed higher on Monday, tracking strong gains in soyoil on the Chicago Board of Trade (CBOT) and related edible oils on China’s Dalian Commodity Exchange.

CPO active month September futures moved in line with our expectations.

As mentioned earlier, the price regained its bullish undertone, but would need to still cross important an resistance level to indicate a bullish reversal. A close above 2,515 MYR/tonne could be a short-term trigger for a recovery towards 2,585-2,610, where strong resistances could kick in. As illustrated in the earlier updates, although it looks like the short- to medium-term has turned bearish, the bigger picture still favours bullishness ahead. The big picture indicates neutral tendencies and a chance of a revival in the bullish trend from critical support points. As expected, we saw a recovery higher from the lows of 2,425 .

An unexpected rise and close above 2,585 could be the ideal signal for a larger upward move to 2,700-25. On the other hand, a direct fall below 2,445 could force us to abandon any chances of a bullish recovery, which could subsequently take prices lower to the next critical support at 2,420 or even lower to 2,355.

The favoured view expects prices to inch up in the coming sessions.

We will now reassess the wave counts, as prices have risen above 2,370-2,400 . A possible new impulse looks to have started again. One of our targets at 1,850 has been 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 2,425 or even lower to 2,225, and then subsequently rise towards a medium to long-term target at 3,600, which could bring this current impulse to an end. The medium to long-term expectation, that we have been having is slowly materializing and the impulse wave is underway.

But, a short-term fall below 2,800 now has caused doubts on our overall bullish expectations. We will have to closely watch the important supports at 2,350-2,400 for any directional call going forward.

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. Positive divergences in indicators hint at a bullish reversal ahead.

The averages in MACD are still below the zero line of the indicator hinting that the bearishness is still intact. Only a crossover again above the zero line could hint at a bullish revival.

Therefore, look for palm oil futures to test resistance levels. Supports are at 2465, 2425 and 2355. Resistances are at 2515, 2580 and 2610.

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

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