RHB Research has maintained its positive trading bias on crude palm oil futures (FCPO) despite prices falling below the RM4,850 support level, as the broader uptrend remains intact with the next key support seen at RM4,700.
FCPO extended its consolidation on Thursday, declining RM36 to close at RM4,816 per tonne.
The commodity opened at RM4,855 and briefly climbed to an intraday high of RM4,891 before profit-taking emerged, pushing it to a low of RM4,813. It subsequently settled at RM4,816, below the previous support level of RM4,850.
Despite the pullback, RHB said the broader bullish structure remains intact, supported by the 50-day simple moving average (SMA), which continues to trend upwards.
However, the Relative Strength Index (RSI) has continued to move lower, signalling that bullish momentum is losing some strength in the near term.
Following the bearish break below RM4,850, RHB expects the next support to emerge at RM4,700.
The research house said this level could help contain further downside and potentially provide a base for a technical rebound towards the RM5,000 resistance.
As long as FCPO remains above RM4,700, RHB views the latest weakness as a healthy correction within the commodity’s broader bullish trend rather than the beginning of a sustained reversal.
A break below RM4,700, however, would weaken the current bullish setup and expose the commodity to the next support level at RM4,600.
On the upside, the immediate resistance is pegged at RM5,000, followed by the higher resistance at RM5,100.
RHB maintained its recommendation for traders to hold the long position initiated at RM4,710, based on the closing price on July 23.
The stop-loss threshold has been set at RM4,700 to manage downside trading risks.
Overall, the research house remains constructive on FCPO despite the latest consolidation, with the upward-trending 50-day SMA supporting its view that the longer-term bullish structure remains intact.
The ability of FCPO to defend RM4,700 will now be critical in determining whether prices can stage another rebound towards the psychologically important RM5,000 level.
