Malaysian palm oil futures on the Bursa Malaysia Derivatives were higher on Monday, as the ringgit weakened once again and support from rest of the edible oil complex were strong. CPO active month June futures are moving perfectly in line with our expectations.

As mentioned in the previous update, further upside to a potential equality target at MYR 2,800-15 per tonne is possible in the coming months.

As we have maintained in the previous update, though, any corrections could see rapid selling pressure, the trend remains strongly bullish and such dips could prove to be short-lived.

The corrections so far have been shallow and making higher tops and bottom, a sign of healthy uptrend.

Supports are at 2,725 followed by 2,650. The ideal target for CPO futures in the coming weeks beyond the near-term resistance at 2,800-25 lies near 2,875-95 levels.

Only an unexpected decline below MYR 2,540-50 levels, also being a rising trend line support point, could cause doubts on our bullish view. Such a fall though not expected could see prices drifting again towards 2,460-65 levels where strong supports are noted again.

The trigger for a such a fall will be seen on a close below 2,700 in the coming week.

Wave counts: A possible new impulse looks to have started again. One of our targets at MYR 1,850/tonne 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 towards 2,310 or even to 2,250, and then subsequently rise towards a medium to long-term target at MYR 2,900/tonne, which could bring this current impulse to an end.

The medium to long-term expectation that we have been having is slowly materialising and we will watch for any signs of exhaustion in the above zone.

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 2,720, 26,50 and 2,600. Resistances are at MYR 2,795, 2,825 and 2,895.

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

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