MARKET DEVELOPMENT
Palm Oil to Test Supports, Rise
Palm Oil to Test Supports, Rise
06/01/2015 (Hindu Business Line) - Crude palm oil (CPO) futures on the Bursa Malaysia Derivatives ended lower on Monday in choppy trade.
Energy futures slid to a fresh five-year low pressuring CPO futures, while a weak ringgit and output concerns on the back of floods supporting prices.
A seasonal drop in output in January and the worst floods in decades could provide support for CPO futures and hold it from falling lower presently.
CPO active month March futures are consolidating with a mild bullish bias.
As mentioned in the earlier update, an unexpected move above MYR 2,217/tonne levels could revive bullish hopes.
Such a move, though not favoured, could see a retest of 2,300 levels again. The short-term picture is still inclined to test immediate targets near 2,350-65 levels. However, failure to cross resistances near MYR 2,300/tonne followed by MYR 2,350/tonne levels, could see prices coming under pressure.
Expect prices to rise as high as 2,510-20, on a break above MYR 2,355, also, being a falling trendline resistance point as well as an equality target.
Supports will now be seen at MYR 2,250 levels followed by MYR 2,235 levels.
Only a fall below MYR 2,200 will hint at weakness again, which is not our favoured view now.
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 1,700 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 of the bearish trend.
Therefore, look for palm oil futures to test the supports and then rise again.
Supports are at MYR 2,250, 2,220 and 2,152. Resistances are at MYR 2,310, 2,355 and 2,425.
The author is the Director of Commtrendz Research and there is risk of loss in trading.
Energy futures slid to a fresh five-year low pressuring CPO futures, while a weak ringgit and output concerns on the back of floods supporting prices.
A seasonal drop in output in January and the worst floods in decades could provide support for CPO futures and hold it from falling lower presently.
CPO active month March futures are consolidating with a mild bullish bias.
As mentioned in the earlier update, an unexpected move above MYR 2,217/tonne levels could revive bullish hopes.
Such a move, though not favoured, could see a retest of 2,300 levels again. The short-term picture is still inclined to test immediate targets near 2,350-65 levels. However, failure to cross resistances near MYR 2,300/tonne followed by MYR 2,350/tonne levels, could see prices coming under pressure.
Expect prices to rise as high as 2,510-20, on a break above MYR 2,355, also, being a falling trendline resistance point as well as an equality target.
Supports will now be seen at MYR 2,250 levels followed by MYR 2,235 levels.
Only a fall below MYR 2,200 will hint at weakness again, which is not our favoured view now.
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 1,700 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 of the bearish trend.
Therefore, look for palm oil futures to test the supports and then rise again.
Supports are at MYR 2,250, 2,220 and 2,152. Resistances are at MYR 2,310, 2,355 and 2,425.
The author is the Director of Commtrendz Research and there is risk of loss in trading.