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Malaysian palm oil futures ended lower on Monday and posted their worst session in a week, tracking weaker performances from other oils.
CPO active month October futures are moving in line with our expectations. Though the price crossed 2,585 MYR/tonne, it failed to close above it.
Despite the recent fall in price, the picture still looks friendly and the recent bullish turnaround story seems to be intact.
However, the weekly chart is yet to give up its bearishness. Therefore, though we expect a recovery in the short-term, it could turn out to be short-lived.
Only a close above 2,610 could hint at further strength for 2,685-2,700 or even higher.
As illustrated in the earlier updates, though, it appears that while the short to medium-term has turned bearish, the bigger picture still favours bullishness. The big picture still indicates neutral tendencies and a chance of a revival in bullishness from critical support points.
As expected, we saw a recovery towards 2,600. Failure to follow through higher could see prices heading towards 2,530-35.
A fall below 2,520 could force us to abandon any chances of a bullish recovery, and 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 find supports and inch higher again in the coming sessions.
Wave countsA possible new impulse looks to have started again. One of our targets at 1,850 was met.
The rally from there looks 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 materialising 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 in the 2,350-2,400 range for any directional call going forward.
Look for palm oil futures to test the support levels and rise higher again.
Supports are at MYR, 2,530, 2,495 & 2,425 Resistances are at MYR 2,585, 2,620 & 2,685.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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