Malaysian palm oil futures on the Bursa Malaysia Derivatives were at 21-month high on Friday and posted their biggest weekly jump in over four months on short-covering ahead of a long weekend and concerns over declining production.

CPO active month April futures moved perfectly in line with our expectations. Prices came close to the potential target around MYR 2,630/tonne levels.

As we have been maintaining, though there were declines in the prices, the trend still remains bullish and our favoured view expects support levels to hold and prices to rise again. Exhaustion signs seen in the chart could push prices lower towards 2,535 initially or even lower to MYR 2,465-70/tonne levels in the coming week.

Only an unexpected decline below 2,445 could hint at a stronger fall towards 2,405-10 levels. As the trend remains strong, we expect supports to hold again and edge higher again.

Favoured view expects a corrective decline to supports levels and then prices to rise again towards a technical objective near 2,630-40 levels in the coming weeks or even higher to a potential equality target at 2,800-15 .

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. 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 correct lower initially and then move higher again.

Supports are at MYR, 2,535, 2,470 and 2,410. Resistances are at MYR 2,595, 2,630 and 2,695.

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

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