MARKET DEVELOPMENT
Palm Oil to Test Resistance, Decline
Palm Oil to Test Resistance, Decline
18/02/2014 (Hindu Business Line) - Malaysian palm oil futures on the Bursa Malaysia Derivatives exchange ended higher on Monday on weather concerns. Unusually dry weather in some parts of South-East Asia will have some impact on production and tighten supplies. The market also found support from Indonesia’s rising biodiesel consumption, which could further tighten supplies. Reversal from the declining export trend which has been pressuring prices over the last few quarters, has reversed lately. Exports of Malaysian palm oil products from February 1 to 15 rose 31.7 per cent to 606,190 tonnes from 460,248 tonnes shipped during January 1 to 15, cargo surveyor Intertek Testing Services said on Saturday.
Crude palm oil active month futures are moving in line with our expectations. As mentioned in the previous update, our favoured view expected supports to hold on the downside and prices to revisit and cross Malaysian ringgit (MYR) 2,600/tonne levels. As mentioned in the previous update, a daily close above MYR 2,652 could once again open the upside targeting MYR 2,750-60 or even higher. Prices are inclined to test resistances in MYR 2,695-2,700 levels immediately. Once above here, prices could grind higher gradually towards MYR 2,745-50 where strong resistance can be seen in the coming week. Supports are noted in the MYR 2,645 zone followed by MYR 2,620 levels. Break below MYR 2,600 is needed to dent our bullish expectations. Favoured view expects supports to hold and prices to test resistance mentioned above.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135/tonne and corrective decline to MYR 2,345-50 levels, followed by a sharp third wave move to MYR 2,575-2,600 materialised. Price structures suggest a possible third wave move ending at MYR 2,690 and a corrective, fourth wave with targets at MYR 2,450 or even lower. 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 hint at bearishness.
Therefore, look for palm oil futures to test the resistance levels in the coming sessions.
Supports are at MYR 2,645, 2,620 and 2,585. Resistances are at MYR 2,700, 2,745 and 2,770.
(The author is the Director of Commtrendz Research. There is risk of loss in trading)
Crude palm oil active month futures are moving in line with our expectations. As mentioned in the previous update, our favoured view expected supports to hold on the downside and prices to revisit and cross Malaysian ringgit (MYR) 2,600/tonne levels. As mentioned in the previous update, a daily close above MYR 2,652 could once again open the upside targeting MYR 2,750-60 or even higher. Prices are inclined to test resistances in MYR 2,695-2,700 levels immediately. Once above here, prices could grind higher gradually towards MYR 2,745-50 where strong resistance can be seen in the coming week. Supports are noted in the MYR 2,645 zone followed by MYR 2,620 levels. Break below MYR 2,600 is needed to dent our bullish expectations. Favoured view expects supports to hold and prices to test resistance mentioned above.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135/tonne and corrective decline to MYR 2,345-50 levels, followed by a sharp third wave move to MYR 2,575-2,600 materialised. Price structures suggest a possible third wave move ending at MYR 2,690 and a corrective, fourth wave with targets at MYR 2,450 or even lower. 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 hint at bearishness.
Therefore, look for palm oil futures to test the resistance levels in the coming sessions.
Supports are at MYR 2,645, 2,620 and 2,585. Resistances are at MYR 2,700, 2,745 and 2,770.
(The author is the Director of Commtrendz Research. There is risk of loss in trading)