Malaysian palm oil futures ended higher tracking gains in soya oil and other edible oil contracts on the Dalian Commodity Exchange. Prices on the Chicago Board of Trade rose higher after last week’s retreat. However, rising production and stocks could weigh on prices.
CPO active month January futures are moving on expected lines. The bigger picture continues to display bullish tendencies and we still expect prices to eventually rise.
Prices are expected to test MYR 2,805-20 per tonne, where strong resistances kick in. Further upside to 2,550-65 also look possible now. Only a fall and close below 2,675 could hint at weakness again targeting 2,610-15 levels, from where it could once start a fresh up move. Dips to 2,745 followed by 2,705-10 are expected to hold support in the coming week.
The favoured view still expects while prices hold above MYR 2,675, it could eventually inch up towards targets mentioned above in the coming sessions.
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.
As mentioned earlier, we expected prices to push higher towards 2,645 initially and then correct lower in a corrective pattern towards 2,425 or even lower to 2,225 and then subsequently rise towards a medium- to long-term target at 3,600.
But, a short-term fall below MYR 2,800 now has caused doubts on our overall bullish expectations.
The present up move from 2,425 levels looks impulsive with potential targets around 2,945-50, while 2,585 holds. The equality target for the present up move lies around 3,120-25 levels.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator hinting at a bullishness to be intact.
Only a crossover again below the zero line could hint at bearishness again.
Therefore, look for palm oil futures to test the resistances in the coming sessions.
Supports are at MYR 2,745, 2,705 and 2,670. Resistances are at MYR 2,805, 2,855 and 2,905.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.