Malaysian Palm oil future s technical analysis outlook for the week ended 161112
Malaysian palm oil futures on BMD exchange ended lower Friday on profit-taking. CPO futures rose sharply higher in a holiday thinned week gaining almost 5 percent due to bottom picking and Chinese buying further underpinning prices. Exports of Malaysian palm oil products for Nov. 1 to 15 fell 0.1 percent to 769,087 tonnes from 769,534 tonnes for the Oct. 1-15 period, cargo surveyor Intertek Testing Services said on Friday. That came as a disappointment after exports rose as much as 22 percent for the Nov. 1-10 period from a month ago, although the slowdown was partly due to a slew of holidays this week. Slowing exports may put pressure on Malaysia's record stocks, which hit 2.51 million tonnes in October, missing expectations for 2.67 million.
CHART
CPO active Jan month futures bounced higher as expected. As mentioned in the previous update, prices could bottom out near the 2195-2210 MYR/ton zone. Prices came very close this level and bounced from there. A double bottom pattern is noticed now indicating a possible near-term bottom and a retracement underway. As illustrated in the earlier update, though we focus on near-term bearishness, in the medium to long-term there is a good possibility of a return near 3000 MYR/ton or even higher, once a bottom is in place closer to 2200 MYR/ton levels. Presently, resistances are seen at 2575 MYR/ton followed by 2620 MYR/ton for the February contract. Unexpected decline below 2250 MYR/ton could at weakness again. Favoured view expects that while prices stay above 2250 MYR/ton a bullish rally higher can be seen.
As mentioned in the earlier update, we will give up the expectation of an impulse still in progress on a daily close below 2675 MYR/ton and such a fall could target 2400 MYR/ton at least. A possible wave “C” is now in progress with potential targets in the 2350-75 MYR/ton range which has been broken and looks like it could extend to 2,100 MYR/ton also. Ideally, a new impulse could begin from lows near 2,050-2,100 MYR/ton levels. RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator hinting at bearishness to be intact.
Therefore, look for palm oil futures to test the support levels and then rise higher.
Supports are at MYR, 2375, 2250 & 2155 Resistances are at MYR 2495, 2540 & 2620.
(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_thiagarajan@yahoo.com .
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