29/06/2008 (Sify.com) - Malaysian palm oil futures ended higher on Friday due to short-covering and higher crude oil prices. Oil leapt to a new record high near $142 a barrel on Friday. Crude oil and soya oil are supporting prices presently, but, lack of further demand from the leading consumers– China and India–is leading to an increase in stock piles. However, hopes remain high that during the festival season, India, China and West Asia would begin purchases in a big way.

CPO active contract is still moving in the range we anticipated in the previous updates. Support was found near the 3,500 Malaysian ringgit (MYR) a tonne levels this time around.

But prices are still stuck in the broad diagonal triangle bearish pattern as discussed in the previous update.

Resistance has been strong in the 3,745-95 MYR a tonne range, where it failed to push higher thrice in the past few months. Favoured view till expects a break lower now to decline sharply lower towards 3,300 MYR a tonne levels or even lower as long as resistances at 3,745-95 MYR a tonne cap upside attempts.

The wave counts need a complete re-look, as the present move has altered most of the big picture counts we have been tracking so far.

A new impulse began from 1,427 MYR a tonne and this could be the third wave which has not ended so far. We can expect a corrective fourth wave in the form of A-B-C in progress now.

A possible fifth wave could have begun and a close above 3,910 MYR a tonne could confirm this possibility. RSI is in the neutral zone now, indicating that it is neither overbought nor oversold.

The averages in MACD are above the zero line in the indicator indicating bullishness to be intact. Therefore, look for palm oil futures to test the resistance levels and correct lower subsequently.