MARKET DEVELOPMENT
Palm Oil May Test Resistance Levels
Palm Oil May Test Resistance Levels
27/05/2013 (Hindu Business Line) - Malaysian palm oil futures on BMD higher Friday, rose on Thursday to their highest in more than a month, stretching gains to a third straight week mostly on short-covering ahead of a long weekend as investors hoped for a recovery in demand ahead of the Muslim fasting month of Ramadan. CPO futures withstood declines across commodity markets following US Federal Reserve Chairman Ben Bernanke's comments that continuing stimulus could be curtailed if the economy improves. Higher export demand as buyers restock ahead of the event in July and easing production could trim stocks further in the world's second largest producer, whose inventory fell to 1.93 million tonnes by the end of April. Markets will closely watch export figures going forward to determine if stocks could ease further.
CPO active month futures are moving perfectly in line with our expectations. As mentioned in the earlier update, prices a strong pullback once again towards 2365-75 MYR/tonne levels in the coming sessions. As illustrated earlier the 2,200 MYR/tonne support has been holding from the year 2010 onwards. We need to wait and watch the 2370-2395 MYR/tonne levels closely to see if there is a change in the overall bearish picture prevailing presently. Supports are now at 2330-35 MYR/tonne followed by 2280 MYR/tonne levels now. However, once, 2,240 MYR/tonne gives way, then we could get into more weakness targeting 2095 MYR/tonne levels.
In the coming week we expect prices to edge higher and find strong resistance at above-mentioned levels and decline lower again. Only a daily close above 2426 MYR/tonne could turn the picture neutral to bullish.
The wave counts still remains mixed and prefer for the time being to go with possibility of an end of wave “C” at 2220 MYR/tonne now. A decline below 2,300 MYR/tonne has dashed all bullish hopes. Ideally, prices could come down towards 2,000 MYR/tonne or even lower in the bigger picture as an extension of wave “C”. There is also a possibility that 2,220 MYR/tonne has ended with an intermediate bottom. This mean an new impulse could end somewhere near 2450 MYR/tonne and the impulse could continue higher while 2270 MYR/tonne remains undisturbed. The 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 and decline lower again.
Supports are at MYR 2335, 2300, 2275. Resistances are at MYR 2375, 2395 and 2425.
(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.)
CPO active month futures are moving perfectly in line with our expectations. As mentioned in the earlier update, prices a strong pullback once again towards 2365-75 MYR/tonne levels in the coming sessions. As illustrated earlier the 2,200 MYR/tonne support has been holding from the year 2010 onwards. We need to wait and watch the 2370-2395 MYR/tonne levels closely to see if there is a change in the overall bearish picture prevailing presently. Supports are now at 2330-35 MYR/tonne followed by 2280 MYR/tonne levels now. However, once, 2,240 MYR/tonne gives way, then we could get into more weakness targeting 2095 MYR/tonne levels.
In the coming week we expect prices to edge higher and find strong resistance at above-mentioned levels and decline lower again. Only a daily close above 2426 MYR/tonne could turn the picture neutral to bullish.
The wave counts still remains mixed and prefer for the time being to go with possibility of an end of wave “C” at 2220 MYR/tonne now. A decline below 2,300 MYR/tonne has dashed all bullish hopes. Ideally, prices could come down towards 2,000 MYR/tonne or even lower in the bigger picture as an extension of wave “C”. There is also a possibility that 2,220 MYR/tonne has ended with an intermediate bottom. This mean an new impulse could end somewhere near 2450 MYR/tonne and the impulse could continue higher while 2270 MYR/tonne remains undisturbed. The 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 and decline lower again.
Supports are at MYR 2335, 2300, 2275. Resistances are at MYR 2375, 2395 and 2425.
(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.)