Malaysian palm oil futures on the Bursa Malaysia Derivatives ended lower on Monday for a fourth straight session to their lowest in nearly three weeks after data showed exports fell this month. Export data released by cargo surveyor Intertek Testing Services for July 1-25, showed a nearly 18 per cent decline in shipments of Malaysian palm oil at 1,152,045 tonnes compared with 1,400,162 tonnes shipped during June 1-25. CPO active month October futures are moving in a volatile range. As mentioned, the present price structures suggest more chances of a decline in the coming sessions and a decline below MYR 2,185/tonne, 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. This level is expected to hold prices from falling further, but, if it is unable to hold, then chances exist for the fall to accelerate further towards 2,050-70 range from where a possible reversal can be seen. Favoured view expects prices to find supports mentioned above and then gradually edge higher again towards resistances at MYR 2,200-20/tonne levels initially. The bigger picture still remains friendly despite recent volatility. 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 looks less 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 2,175 levels. This once again puts the spot light on the MYR 1,700 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 in still 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 2,120, 2,075 and 2,055. Resistances are at MYR 2,175, 2,200 and 2,230.

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

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