MARKET DEVELOPMENT
Palm Oil to Test Supports, Rise
Palm Oil to Test Supports, Rise
12/08/2014 (Hindu Business Line) - Malaysian crude palm oil futures on the Bursa Malaysia Derivatives ended sharply lower on Monday after a rise in end-stocks and a possible bumper soyabean crop looming large.
Palm oil stocks in Malaysia were 1.5 per cent higher with strong output further adding pressure on stocks, according to a monthly report from the Malaysian Palm Oil Board.
Cargo surveyor SGS estimated that exports during August 1-10 fell by almost 20 per cent compared with the previous month. CPO active month October futures are sharply lower after breaking key supports on the downside moving lower as expected.
As mentioned in the previous update, a close below MYR 2,245/tonne could see prices declining to 2,185-2,200 levels.
CPO futures need to overcome MYR 2,252 levels and close above it for any meaningful upward correction in the coming sessions.
Such a retracement could see prices testing 2,320-25 levels on the upside subsequently where it might find strong resistance again. Some of the near-term targets are at 2,135 followed by an extremely strong support at 2,095-97 levels.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135 and corrective decline to 2,345-50 levels, followed by a sharp third wave move to MYR 2,575-2,600/tonne materialised.
Price structures suggest a possible third wave move ending at 2,690 and a corrective, fourth wave with targets at 2,450 now. The fifth wave possibly ended at 2,898 and a corrective A-B-C in progress with an equality target now stretching to 2,135 levels now.
RSI is in the oversold zone now indicating it is oversold and a possible upward correction in the offing.
The averages in MACD are still below the zero line of the indicator hinting at bearishness to be intact.
Only a crossover again above the zero line could hint at resumption in the bullish trend.
Therefore, look for palm oil futures to test supports and then pullback again.
Supports are at MYR 2,165, 2,135 and 2,085. Resistances are at MYR 2,227, 2,252 and 2,325.
Palm oil stocks in Malaysia were 1.5 per cent higher with strong output further adding pressure on stocks, according to a monthly report from the Malaysian Palm Oil Board.
Cargo surveyor SGS estimated that exports during August 1-10 fell by almost 20 per cent compared with the previous month. CPO active month October futures are sharply lower after breaking key supports on the downside moving lower as expected.
As mentioned in the previous update, a close below MYR 2,245/tonne could see prices declining to 2,185-2,200 levels.
CPO futures need to overcome MYR 2,252 levels and close above it for any meaningful upward correction in the coming sessions.
Such a retracement could see prices testing 2,320-25 levels on the upside subsequently where it might find strong resistance again. Some of the near-term targets are at 2,135 followed by an extremely strong support at 2,095-97 levels.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135 and corrective decline to 2,345-50 levels, followed by a sharp third wave move to MYR 2,575-2,600/tonne materialised.
Price structures suggest a possible third wave move ending at 2,690 and a corrective, fourth wave with targets at 2,450 now. The fifth wave possibly ended at 2,898 and a corrective A-B-C in progress with an equality target now stretching to 2,135 levels now.
RSI is in the oversold zone now indicating it is oversold and a possible upward correction in the offing.
The averages in MACD are still below the zero line of the indicator hinting at bearishness to be intact.
Only a crossover again above the zero line could hint at resumption in the bullish trend.
Therefore, look for palm oil futures to test supports and then pullback again.
Supports are at MYR 2,165, 2,135 and 2,085. Resistances are at MYR 2,227, 2,252 and 2,325.