Malaysian palm oil futures on the Bursa Malaysia Derivatives ended marginally lower Monday falling for a third consecutive session to their lowest level since July 9 as poor exports and a stronger dollar dented sentiment further. Exports of Malaysian palm oil products for July 1-20 fell 15.5 per cent to 907,574 tonnes, from 1,074,410 tonnes shipped a month ago, cargo surveyor Intertek Testing Services said in its latest estimate on Monday.

CPO active month October futures are moving in a volatile range. As mentioned earlier, as the previous support at MYR 2,210-20/tonne was broken, it has turned into a near-term resistance. Prices crossed the resistance but closed lower indicting weakness again.

As mentioned in the previous update, present price structures suggest more chances of a decline in the coming sessions and a decline below 2,185, hinted at further weakness. Such a move could revive bearish expectations for a decline lower towards 2,120-25 levels, being a rising trend line support point. Favoured view expects prices to consolidate in a broad range and find supports mentioned above and then gradually edge higher again towards resistances at 2230-35 MYR/tonne levels.

Very strong support will be noticed around 2,050-70 range, which ideally could hold any attempts to decline. Only, a close below MYR 2,050/tonne could trigger a stronger decline from there, which does not look likely as of now.

We will have to once again review the wave counts, but will wait for a crossover above MYR 2,400/tonne to do that. Till then we will stick to our earlier assessment.

As mentioned earlier, a downtrend again could be confirmed on a close below MYR 2,175/tonne levels. This once again puts the spot light on the MYR 1,700/tonne mark, which we anticipated earlier. We are now tracking the final leg of an impulse in a declining trend with potential targets near 1,850 or even lower to 1,700 levels. Ideally, the next leg of a larger up move could potentially begin from this area. But a direct rise above 2,500 in huge volumes could indicate a turnaround suggesting a possible move to 2,800 later in the year.

RSI is still in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone below the zero line of the indicator again hinting at a bearish trend going forward. Only a crossover again above the zero line could hint at a resumption of the bearish trend.

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

Supports are at MYR 2,145, 2,120 and 2,057. Resistances are at MYR 2,210, 2,235 and 2,285.

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

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