Malaysian palm oil futures ended higher on Monday on improved export demand. Exports of Malaysian palm oil products for March rose 21.6 per cent to 1,391,383 tonnes from 1,144,673 tonnes shipped during February.
CPO active month June contract are moving higher testing resistance levels, but the decline we anticipated after that has not materialised. Prices are turning friendly, but still continue to display neutral to bearish tendencies.
As mentioned earlier, near-term supports are at MYR 2,400-10/tonne followed by 2,350-60 in the coming sessions. Any upticks to 2,450-55 could cap upside attempts. Only a direct rise and close above here could take prices higher towards 2,525-35 again being a strong resistance levels. Since it has closed above here, it looks set for testing the next important resistance at MYR 2,475-80, a minor one followed by 2,515-20 being a strong one on the upside. And, failure to follow-through higher from there could take prices lower again to 2,400 again.
Only a decisive fall again below MYR 2,360 could see further declines to 2,185-2,255 too, from where it can rebound subsequently.
The favoured view now expects that while dips to 2,435-40 holds, we can expect more upside towards 2, 520 .
Wave counts: A possible new impulse looks to have started again. One of our targets at 1,850 was met. The rally from there looks very impressive. We expected prices to push higher towards 2,645 initially and then correct lower towards 2,425 or even lower to 2,225, and then subsequently rise towards a medium- to long-term target at 3,600 , which could bring this current impulse to an end.
But, a short-term fall below 2,800 now has cast doubts on our overall bullish expectations. The present up move from 2,425 looks impulsive with potential targets around 2,945-50while 2,585 holds. The equality target for the present up move lies around 3,120-25 .
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator hinting at bearishness to be intact.
Only a crossover again above the zero line could hint at a bullish reversal again.
Therefore, look for palm oil futures to test the resistance levels and then decline again.
Supports are at MYR 2,440, 2,400 and 2,360. Resistances are at MYR 2,475, 2,520 and 2,570.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.