Malaysian palm oil futures on the Bursa Malaysia Derivatives ended lower on Monday hurt by weakening exports.

CPO active month February futures edge higher as expected. As mentioned earlier, prices have been gradually inching lower, but have not given up the bullish picture yet.

As hinted earlier, good support will be seen at MYR 2,260-65 per tonne levels. Price structures are now turning friendly again, with hopes of a retest of the 2,400 levels or even higher to 2,435 in the coming sessions. Support is seen at 2,305 followed by 2,265 levels.

However, failure to hold support here could see prices dropping lower to 2,215-20 levels.

As mentioned earlier, we feel support 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, which we do not favour.

We will now reassess the wave counts, as prices have crossed over above MYR 2,370-2,400/tonne.

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 consolidate and rise again.

Supports are at MYR 2,310, 2,265 and 2,220. Resistances are at MYR 2,375, 2,398 and 2,430.

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

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