Malaysian palm oil futures rose to their highest in a week on Monday as strong export demand put the contract on track for a second straight session of gains. CPO active month August futures moved on expected lines.
Prices could pull back towards resistances at 2,650-70 MYR/tonne followed by 2,725 again. Prices are heading right in that direction. Strong resistance will be noted around 2,688-90 for August, followed by 2,735-40, a fibonnaci retracement level.
It would appear difficult to cross this zone in the near-term and one can expect minor corrective declines from there. Any dips to 2,645-50 followed by 2,610 are expected to hold attempts to decline. As illustrated in the earlier updates, though, it looks like the short to medium-term has turned bearish, the bigger picture still favours bullishness ahead.
The big picture still indicates neutral tendencies and a chance of a revival in the bullish trend from critical support points. The current rally seems to suggest an upside in the coming sessions towards 2,735 with slight chances of even extending to 2,825-30 before fizzling out.
An unexpected fall and close below 2,590 could cause weakness temporarily, but could once again edge higher from there. Only a fall below 2,575 could force us to abandon our bullish view. Such a decline could expose the downside once again towards 2,420 or even lower, which is not our favoured view.
We will now reassess the wave counts, as prices have crossed over above 2,370-2,400.
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