October 16, 2017:
Malaysian palm oil futures ended marginally higher, supported by overnight strength in soya oil on the Chicago Board of Trade (CBOT) and other related oils on China’s Dalian Commodity Exchange.
CPO active month January futures are moving on expected lines. Ideally, prices are expected to test MYR 2,805/20 per tonne in the coming sessions, where strong resistance kicks in. A further upside from there doesn’t look likely in the immediate future, but the broader picture is conducive for an upward move to 2,905 or even higher to 3,045-50.
Only a fall and close below 2,645-50 could hint at weakness again targeting 2,610-15, from where it could once start a fresh upward move. But, despite the corrective declines from time to time, the bullish trend still remains intact.
The present downward move from the recent highs looks like a corrective decline within a rising trend. Dips to 2,745 are expected to hold support in the coming week.
The favoured view still expects that while the price holds above 2,605-10 it could eventually inch higher, to the 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 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.
The medium- to long-term expectation that we have been having is slowly materialising and the impulse wave is under way. But, a short-term fall below 2,800 now has caused doubts on our overall bullish expectations. The present up move from 2,425 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 .
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 the bullishness being intact. Only a crossover again below the zero line could hint at bearishness.
Therefore, look for palm oil futures to consolidate and rise. Supports are at MYR 2,745, 2,705 and 2,670. Resistances are at MYR 2,770, 2,805 and 2,835.
The writer is the Director of Commtrendz Research. There is risk of loss in trading.
(This article was published on October 16, 2017)