Malaysian palm oil futures on Monday ended near a four-month high hit in early trade on Monday, tracking overnight gains in soyoil on the Chicago Board of Trade and on forecasts of lower-than-expected output increases and end-stocks.

CPO active month October futures are moving perfectly in line with our expectations. As we have been maintaining, despite the fall in prices, the picture still looks friendly and the recent bullish turnaround story seems to be intact. However, the weekly charts is yet to give up the bearishness. A close above 2,610 MYR/tonne , opened the way for higher levels. While staying above 2,635-40 , prices can extend higher to 2,725 where strong resistances are noted. Chances exist for an extension to 2,795/2,800 too, potential target area for this upmove. As illustrated in the earlier updates, though, it looks like the short to medium-term has turned bearish, the bigger picture still favours bullishness ahead. The big picture still indicates neutral tendencies and a chance of a revival in bullish trend from critical support points. As expected, we saw prices testing 2,685. A minor corrective dips to 2,635-40 looks likely before inching higher once again. Stronger supports are at 2,600-10 . Ideally, we expect prices to pause and move sideways in a correction and then make the next attempt to break higher towards 2,725 . Unexpected fall below 2,585 could dent our bullish expectations. Favoured view expects prices to find supports and inch higher again in the coming sessions.

We will now reassess the wave counts, as prices have crossed over above 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. As mentioned earlier, we expected prices to push higher towards 2,645initially 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 2,800now has caused doubts on our overall bullish expectations. The present up move from 2,425 looks impulsive with potential targets around 2,795-2,800 while 2,585 holds.. 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 have gone above the zero line of the indicator hinting at a bullish reversal. Only a crossover again below the zero line could hint at bearishness again.

Therefore, look for palm oil futures to test the support levels and rise higher again.

Supports are at MYR, 2,640, 2,620 & 2,585 Resistances are at MYR 2,700, 2,725& 2,795.

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

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