MARKET DEVELOPMENT
Palm Oil May Test Resistance
Palm Oil May Test Resistance
13/05/2013 (Hindu Business Line) - Malaysian palm oil futures on Bursa Malaysia Derivatives ended on Friday at their highest in two weeks as stocks eased below the key 2-million-tonne mark in Malaysia. But the gains were capped by a fall in exports in the first ten days of May and a strengthening local currency. Industry regulator Malaysian Palm Oil Board showed inventory levels at the end of April 11.3 percent lower at 1.93 million tonnes against the previous month's 2.17 million tonnes. However, exports of palm group of oil products during May 1-10 slid 16.7 per cent to 3,80,047 tonnes compared with the same period in April. The ringgit (MYR) dipped to a near 5-month low on Monday after that it surged against the dollar following the ruling coalition's win in Malaysia's general elections. Gains in the palm complex could be capped by falling energy prices and a strengthening dollar.
Crude palm oil active July month futures are moving in line with our expectations. As mentioned in the earlier update, prices could retest the 2,210/2,220 MYR/t levels before seeing a strong pullback once again towards 2,345/2,365 MYR/t levels in the coming sessions. Prices bounced from a low of 2,229 MYR/t levels. Once the resistance at 2,345-2,355 MYR/t is cleared then it could see a strong resistance once again emerging at 2,390-2,395 MYR/t levels being a falling trend line resistance point.
As illustrated earlier the 2,200 MYR/t support has been holding from the year 2010 onwards. We need to wait and watch the 2,390-2,410 MYR/t levels closely to see if there is a change in the overall bearish picture prevailing presently. Supports are at 2,300 MYR/t followed by 2,280 MYR/t levels now. However, once 2,200 MYR/t gives way, then we could get into more weakness targeting 2,095 MYR/t levels, which we do not favour presently. In the coming week we expect prices to edge higher but as of now it looks more likely to decline lower once again and a sustained upward momentum still looks unlikely.
The wave counts still remains mixed and prefer for the time being prefer to go with possibility of an end of wave “C” at 2,220 MYR/t now. For the present impulse move once above 2,650 MYR/ton, potential exists for the impulse rally to extend to 2,755-2,800 MYR/t range too. A decline below 2,300 MYR/t has dashed all bullish hopes. Ideally, prices could come down towards 2,000 MYR/t or even lower in the bigger picture.
RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator hinting at weakness. Only a crossover above the zero line again could indicate a bullish reversal.
Therefore, look for palm oil futures to test the resistances levels.
Supports are at MYR 2,300, 2275 and 2,210 Resistances are at MYR 2,345, 2,395 and 2420.
(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar.t@gmail.com.)
Crude palm oil active July month futures are moving in line with our expectations. As mentioned in the earlier update, prices could retest the 2,210/2,220 MYR/t levels before seeing a strong pullback once again towards 2,345/2,365 MYR/t levels in the coming sessions. Prices bounced from a low of 2,229 MYR/t levels. Once the resistance at 2,345-2,355 MYR/t is cleared then it could see a strong resistance once again emerging at 2,390-2,395 MYR/t levels being a falling trend line resistance point.
As illustrated earlier the 2,200 MYR/t support has been holding from the year 2010 onwards. We need to wait and watch the 2,390-2,410 MYR/t levels closely to see if there is a change in the overall bearish picture prevailing presently. Supports are at 2,300 MYR/t followed by 2,280 MYR/t levels now. However, once 2,200 MYR/t gives way, then we could get into more weakness targeting 2,095 MYR/t levels, which we do not favour presently. In the coming week we expect prices to edge higher but as of now it looks more likely to decline lower once again and a sustained upward momentum still looks unlikely.
The wave counts still remains mixed and prefer for the time being prefer to go with possibility of an end of wave “C” at 2,220 MYR/t now. For the present impulse move once above 2,650 MYR/ton, potential exists for the impulse rally to extend to 2,755-2,800 MYR/t range too. A decline below 2,300 MYR/t has dashed all bullish hopes. Ideally, prices could come down towards 2,000 MYR/t or even lower in the bigger picture.
RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator hinting at weakness. Only a crossover above the zero line again could indicate a bullish reversal.
Therefore, look for palm oil futures to test the resistances levels.
Supports are at MYR 2,300, 2275 and 2,210 Resistances are at MYR 2,345, 2,395 and 2420.
(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar.t@gmail.com.)