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Malaysian palm oil futures on the Bursa Malaysia Derivatives ended higher on Monday, in thin volumes erasing losses made in the last few trading sessions on slowing demand and rising stockpiles.
Weak exports which contributed to high stockpiles of palm had also dampened sentiment.
CPO active month January futures are moving on expected lines. As expected, supports held for a retest of recent highs above MYR 2,375/tonne levels.
As mentioned earlier, the bigger picture has turned neutral to bullish, but lack of momentum and volumes is discouraging the bull camp.
Prices have been making higher bottoms signifying an upward trend in progress. Close above 2,386 could once again indicate strength for the CPO futures, aiming for 2,460 levels or even higher to 2,515 levels. Strong support will now be seen at 2,345-50 levels followed by 2,310 .
While supports hold near 2,300-10 levels, a potential medium-term technical target is near 2,645 post the resistance at 2,500-30.
Only an unexpected decline below 2,295 could hint that the expected rise higher might not materialise.
Such a decline could open the downside again targeting 2,200 levels or even lower.
We will now reassess the wave counts, as prices have crossed over above MYR 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 test the resistance levels.
Supports are at MYR 2,350, 2,260 and 2,215. Resistances are at MYR 2,395, 2,425 and 2,460.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
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