Comments
Crude palm oil (CPO) futures on the Bursa Malaysia Derivatives ended lower on Monday on worries over gloomy global economic outlook. An official from the Malaysian Palm Oil Board said prices will be volatile this year despite unfavourable weather. However, drought in Indonesia and floods in Malaysia, which could damage crops, may cause tight supplies that can push prices higher. Weakness in crude oil and other commodities continue to pressure CPO futures, while flood warnings and the local currency seems to be supportive currentlyCPO active month April futures moved in line with our expectations. As mentioned in the earlier update, a consolidation can now be expected before prices rise again. The MYR 2,330-75/tonne range could be seen before prices breakout higher towards 2,450 levels. The move could not sustain above 2,395 levels. The subsequent decline below MYR 2,320/tonne has hinted at weakness again. Prices could now dip to MYR 2,275 followed by 2,235-40 levels.
However, we still view such a decline as a corrective dip within a minor uptrend. Expect prices to rise as high as MYR 2,450/tonne levels, while support hold. Only a fall below 2,230 will hint at weakness again, which is not our favoured view presently.
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 2,175 levels. This once again puts the spotlight on the MYR 1,700/tonne mark, which we anticipated earlier. We are now tracking a 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. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator hinting at a bullish reversal. Only a crossover again below the zero line again could hint at resumption in the bearish trend.
Therefore, look for palm oil futures to test the support levels and then rise again.
Supports are at MYR 2,275, 2,235 and 2,205. Resistances are at MYR 2,355, 2,395 and 2,450.
The author is the Director of Commtrendz Research and there is risk of loss in trading.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.