MARKET DEVELOPMENT
Palm Oil to Test Support, Rise
Palm Oil to Test Support, Rise
19/05/2014 (Hindu Business Line) - Malaysian palm oil futures on the Bursa Malaysia Derivatives Exchange fell to their lowest level in more than three months on Monday, following losses in overseas soya oil markets and a strong ringgit. Demand has been robust so far and a further fall in prices could boost demand hopes. Cargo surveyor data showed that shipments of Malaysian palm products jumped between 23 and 28 per cent in the first half of May compared with a month ago, with bigger purchases from India, Pakistan and Europe.
Crude palm oil active month August futures fell lower as expected. As mentioned in the previous update, we were expecting prices to test resistances around MYR 2,625-35/tonne or even higher and then subsequently to continue the downtrend and go below 2,500/tonne levels. Prices have moved as anticipated. Prices structures show weakness with a possibility to break below 2,500 and test initial support at MYR 2,485/90.
We believe this to be a strong support level and the likelihood of a retracement higher. Failure to hold here could see prices dropping further to MYR 2,425-30/tonne levels. However, a daily close above 2,635 could turn the picture to neutral and see a retest of 2,700-15 levels again, which we do not favour currently.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135 and corrective decline to MYR 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 MYR 2,690/tonne and a corrective, fourth wave with targets at 2,450 or even lower. The fifth wave possibly ended at 2,898 and a corrective A-B-C in progress with an equality target at 2,454 levels now.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator hinting at a bearish reversal. Only a crossover again above the zero line could at resumption in the bullish trend.
Therefore, look for palm oil futures to test support levels.
Supports are at MYR 2,510, 2,485 and 2,430. Resistances are at MYR 2,565, 2,598 and 2,625.
(The author is the Director of Commtrendz Research and also in the advisory panel of Commodity exchanges and corporate houses. The views expressed in this column are his own. 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 month August futures fell lower as expected. As mentioned in the previous update, we were expecting prices to test resistances around MYR 2,625-35/tonne or even higher and then subsequently to continue the downtrend and go below 2,500/tonne levels. Prices have moved as anticipated. Prices structures show weakness with a possibility to break below 2,500 and test initial support at MYR 2,485/90.
We believe this to be a strong support level and the likelihood of a retracement higher. Failure to hold here could see prices dropping further to MYR 2,425-30/tonne levels. However, a daily close above 2,635 could turn the picture to neutral and see a retest of 2,700-15 levels again, which we do not favour currently.
As mentioned earlier, prices met an intermediate wave target at MYR 2,135 and corrective decline to MYR 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 MYR 2,690/tonne and a corrective, fourth wave with targets at 2,450 or even lower. The fifth wave possibly ended at 2,898 and a corrective A-B-C in progress with an equality target at 2,454 levels now.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator hinting at a bearish reversal. Only a crossover again above the zero line could at resumption in the bullish trend.
Therefore, look for palm oil futures to test support levels.
Supports are at MYR 2,510, 2,485 and 2,430. Resistances are at MYR 2,565, 2,598 and 2,625.
(The author is the Director of Commtrendz Research and also in the advisory panel of Commodity exchanges and corporate houses. The views expressed in this column are his own. 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.)