NCDEX tips, Palm oil will test supports, rise

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Malaysian palm oil futures fell on Monday, after rebounding from the multi-month lows made last Friday and recording its biggest daily gains in nearly five months. Seasonally falling output and upcoming Chinese new year demand is expected to put a floor to prices in the coming weeks. But, exports have been benign so far and that has dented the sentiment of the market badly.

CPO active month March edged lower after a smart pull-back in the previous session. As mentioned earlier, the picture still looks mixed with a mild bearish bias in the short-term but still does not show any major change in the big picture which is still friendly.

The upward retracement from MYR 2,420/tonne to MYR 2,560/tonne has been impressive with decent volumes, making us believe a possible intermediate bottom is in place. However, it needs to clear the near-term resistance at 2,560 levels. Such a rise could see prices edging higher towards 2,635-50 levels where stronger resistances kick in.

Dips to 2,485-90 are expected to hold supports in the coming week.

The favored view still expects while prices hold above supports in the broader picture, it could eventually inch higher in the coming sessions. The downside from here looks limited.

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.