Wednesday, March 23, 2011

CPO Daily Chart: A Breakout Above The Down-Trend-Line (DTL) Will Trigger More Upside Towards RM3600 - RM3700 Zones

Crude Palm Oil (CPO) Is Testing Recent Down-Trend-Line (DTL).

Following the earthquake, tsunami and nuclear crisis in Japan since March 11, FCPO tumbled to RM3250/MT on March 15 (-18% against 52W high of RM3967/MT on February 10) before ending at RM3420 yesterday. Sentiment was also dampened by SGS bearish data estimates that Malaysian palm oil exports fell 9.5% to 734.9k MT in March against 811.8k MT shipped in February.

Having said, our institutional research remains bullish on CPO price with average CPO forecast of RM3200/MT in 2011, underpinned by the tight supply of CPO (which in turn is driven by adverse weather condition that results in weak CPO output) and rising demand. The positive view also concurs with most speakers during the recent palm oil conference.

Since breaking above the neckline resistance around RM3000 levels in October 10, the FCPO surged as high as RM3967 before entering into the current correction. Immediate support levels are the RM3289 (lower Bollinger band) and RM3246 (150-day SMA), followed by the more solid long term 200-d SMA of RM3040.

Overall, near term outlook will turn better if the immediate DTL (around RM3500) is violated, especially with the bullish slow stochastic and MACD coupled with the “Harami” candlestick last Thursday. The next upside targets are the RM3519-3585 gap recorded on March 10.

Further rally could be capped at strong resistance levels of RM3661 (50-d SMA) and RM3709 (upper Bollinger band).

CPO Daily Chart: A Breakout Above The Down-Trend-Line (DTL) Will Trigger More Upside Towards RM3600 - RM3700 Zones, Supported By Bullish Technical Indicators.
CPO 22-03-2011


Source: HLeFutures

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