Commodity Calls

Palm oil will test support levels, rise

Gnanasekaar T | Updated on January 09, 2018 Published on November 20, 2017

Malaysian palm oil futures on Monday fell to two-month low as sentiment took a hit from India’s move to raise import tax of edible oils to the highest in over a decade.

As cautioned earlier, mild exhaustion signs are noticed that could see prices correcting lower. Only a fall and close below MYR 2,670/tonne could hint at weakness again targeting 2,610-15 , from where it could once start a fresh up move. We expected supports to hold but the momentum continues to be strong on the sell side that could further push lower towards 2,605-10. On an intra-day basis prices could also aim for 2,572 , but it could strongly rebound from there.

As illustrated earlier, despite the corrective declines from time to time, the bullish trend still remains intact. Dips to 2,605 followed by 2,572 are expected to hold support in the coming week.

The favoured view still expects while prices hold above supports in the broader picture, it could eventually inch higher towards targets mentioned above in the coming sessions.

Wave counts: 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.

As mentioned earlier, we expected prices to push higher towards 2,645 initially and then correct lower towards 2,425 or even lower to 2,225 , and then subsequently rise towards a medium- to long-term target at 3,600.

The medium- to long-term expectation, that we have been having is slowly materialising and the impulse wave is under way. But a short-term fall below 2,800 now has caused doubts on our overall bullish expectations. The present up move from 2,425 looks impulsive with potential targets around 2,945-50while 2,585 holds. The equality target for the present up move lies around 3,120-25 .

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator hinting at a bullishness to be intact. Only a crossover again below the zero line could hint at bearishness again.

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

Supports are at MYR 2,605, 2,570 and 2,540. Resistances are at MYR 2,710, 2,760 and 2,825.

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

Published on November 20, 2017
This article is closed for comments.
Please Email the Editor