RHB Investment Bank has maintained its bearish outlook on crude palm oil (CPO) futures after prices came under renewed selling pressure, with the benchmark contract expected to test the RM4,390 support level before potentially extending losses towards RM4,300.
In a technical analysis note, the research house said the September crude palm oil futures (FCPO) contract fell RM51 on Thursday to close at RM4,506 per tonne, reinforcing the negative price trend.
The contract opened at RM4,551 and briefly climbed to an intraday high of RM4,570 before heavy selling pushed prices to a low of RM4,504, eventually settling at RM4,506.
RHB said the formation of a long bearish candlestick indicates that market sentiment has weakened further, while the 50-day simple moving average (SMA) has now turned into a key overhead resistance level after prices broke below it.
“The long bearish candlestick reaffirmed the 50-day SMA line has become the overhead resistance after the commodity broke below the average line,” the research house said.
According to RHB, the latest price action suggests sellers remain firmly in control of the market, with technical momentum pointing to a continuation of the current downtrend.
The immediate focus is now on the RM4,390 support level, which RHB views as a critical technical threshold.
A decisive break below this level could trigger a fresh wave of selling, opening the way for prices to decline towards the RM4,300 mark.
The research house noted that support levels tend to weaken during bearish market conditions, increasing the likelihood of further downside if selling pressure persists.
Given the prevailing technical setup, RHB maintained its recommendation for traders to hold existing short positions initiated at RM4,481 on May 12.
The bank continues to recommend a stop-loss level at RM4,700 to manage downside trading risks.
On the upside, RHB identified RM4,600 as the nearest resistance level, followed by stronger resistance at RM4,700.
Despite the recent pullback, the research house believes bears remain firmly in the driver’s seat, with the overall technical bias continuing to favour lower palm oil prices in the near term.
