MARKET DEVELOPMENT
Palm Oil to Test Support, Rise
Palm Oil to Test Support, Rise
04/03/2014 (Hindu Business Line) - Malaysian palm oil futures on Bursa Malaysia Derivatives ended lower on Monday on profittaking ahead of the industry conference. Prices remain supported on the back of tight seasonal supplies and concerns over dry weather in South-East Asian producing regions, as well as in Brazil. Crude palm oil active month futures are moving perfectly in line with our expectations. As mentioned in the previous update, our favoured view expects prices to stabilise in the MYR 2,675-85 a tonne zone and rally towards an equality target of 2,860-65 levels with minor resistances in the 2,825 and 2,845 zone. Prices are showing some exhaustion signs, but still remains strongly poised to make multimonth highs. A corrective dip to 2,685-2,700 levels are expected to hold supports now in the coming sessions. An ideal target lies at 2,890-2,905 from where a strong correction can be expected.
Only a close below 2,670 could postpone our bullish expectations. Favoured view expects supports to hold and prices to test the potential targets mentioned above. As mentioned earlier, prices met an intermediate wave target at MYR 2,135/tonne and corrective decline to 2,345-50 levels, followed by a sharp third wave move to 2,575-2,600 materialised.
Price structures suggest a possible third wave move ending at 2,690 and a corrective, fourth wave with targets at 2,450 or even lower. The present move resembles a fifth wave move with possible targets near 2,865 with an extreme possibility of even testing MYR 3,075 in the coming months. RSI is in the overbought zone now indicating a possible downward correction in the offing.
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 supports or consolidate initially and then move up again towards resistances. Supports are at MYR 2,785, 2,735, 2,685. Resistances are at MYR 2,865, 2,900 and 2,945.
(The writer is the Director of Commtrendz Research. There is a risk of loss in trading. )
Only a close below 2,670 could postpone our bullish expectations. Favoured view expects supports to hold and prices to test the potential targets mentioned above. As mentioned earlier, prices met an intermediate wave target at MYR 2,135/tonne and corrective decline to 2,345-50 levels, followed by a sharp third wave move to 2,575-2,600 materialised.
Price structures suggest a possible third wave move ending at 2,690 and a corrective, fourth wave with targets at 2,450 or even lower. The present move resembles a fifth wave move with possible targets near 2,865 with an extreme possibility of even testing MYR 3,075 in the coming months. RSI is in the overbought zone now indicating a possible downward correction in the offing.
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 supports or consolidate initially and then move up again towards resistances. Supports are at MYR 2,785, 2,735, 2,685. Resistances are at MYR 2,865, 2,900 and 2,945.
(The writer is the Director of Commtrendz Research. There is a risk of loss in trading. )