Palm oil may test support level
Saturday, July 03, 2021 2:27 PM

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Malaysian palm oil futures ended marginally lower on Friday influenced by weak external markets and fear that China's economic growth was slowing. Mounting worries about the strength of the global economic recovery after manufacturing data showed China's rapid growth was slowing. Oil fell below $75 a barrel in Asian hours, beginning the second half of the year on a weak note after falling nearly 5 per cent in the first half, as signs of slowing economic growth in China fuelled energy demand doubts. Cargo surveyors Intertek testing services and Societe Generale de Surveillance reported a slight rise in Malaysia's June exports on Wednesday which did not do enough to change the sentiment.

CPO futures fell sharply lower. As mentioned earlier the big picture structures prompt more down side towards 2,255 thereabouts. As expected we saw the resistances near 2,425 Malaysian ringgit (MYR/tonne) being tested before the slide began. Key support is now seen at 2,305-10 MYR/tonne. Resistance are pegged at 2,385-95 MYR/tonne. Any corrective up move looks should find resistance, before the downtrend resumes towards 2,310 MYR/tonne or even lower towards 2,245 MYR/tonne. Only an unexpected rise above 2,455 MYR/tonne could postpone the bearishness. Such a rise could even test 2,470-75 MYR/tonne on the upside. A daily close below 2,370 MYR/tonne level has hinted at the resumption of the downtrend now.

We believe the impulse that began from 1,427 MYR/tonne, which hit 4,486 MYR/tonne ended and a prolonged corrective move has possibly ended at 1,335 MYR/tonne. The fresh impulse move, which we have been anticipating towards 3,000 MYR/tonne is losing ground. This view gains momentum only on a close above 2,870 MYR/tonne. Fall below 2,345 MYR/tonne could cause doubts on this overall bullish view. 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 indicating bearish to be intact. Only a cross-over above the zero line again could indicate bullishness again. Therefore, look for palm oil futures to test the support levels now.

Supports are at MYR 2,305, 2,275 and 2,245. Resistances are at MYR 2,355, 2,385 and 2,420.

Gnanasekaar .T

(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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