CRUDE palm oil futures traded on Bursa Malaysia Derivatives trended in an erratic fashion last week, partly following the choppy and volatile Chicago Board of Trade soyoil futures and wild swings in the crude oil prices.
Supporting the sentiment was talk that India would step up purchases of edible oil for the next three months to cover the needs for the festive season.
The small decline in the exports of Malaysian palm oil for the first 20 days of May had limited impact on trading. Societe Generale de Surveillance estimated exports to be lower by 1.5% at 849,767 tonnes compared with 862,636 tonnes in the same period last month.
The August futures prices ranged widely from RM3,658 to RM3,513 and settled the week higher at the top-end of its week’s range – RM3,654, up RM84 per tonne from a week before.
Total volume for the shortened four-day trading week fell to 29,699 contracts from 33,076 contracts previously. Total open interest as at Thursday’s close dropped to 37,345 contracts from 38,641 contracts the previous week.
The daily candlestick chart ended the week slightly positive. An engulfing bullish line occurred on Friday. The formation of a bullish engulfing pattern during an upward trend usually indicates a top.
If the next candle closes below the top of the current (white) candle’s real body, it would confirm that a temporary technical top has been reached.
The August futures has an immediate chart hurdle at the triple-top resistance level of RM3,650-RM3,700.
The emergence of fresh bullish momentum on Friday suggests that the market would continue with its upward strength this week and attempt to scale this important technical top.
The overall setting would turn very bullish if these levels were to be successfully vaulted.
Chart support for this week stands at the RM3,625-RM3,600 level. Fresh downward pressure would emerge if this support is breached.
The daily technical indicators finished the week mostly positive and signalled that the underlying strength of the market was firm.
The daily stochastic triggered the buy signal on May 21 and remained positive on Friday’s close. The oscillator per cent K and D ended higher at 77.56% and 63.69% respectively.
The main trend tracker, the 3- and 7-day exponentially smoothed moving average price lines (ESA lines), ended Friday in positive divergence and showed that the immediate-term trend was constructive.
The 5-day Relative Strength Index (RSI) finished higher near the overbought territory at 78.36 points and indicated that the market’s immediate underlying strength was bullish.
