Wednesday, April 11, 2012

CPO Outlook: Short Term Getting Overbought

CPO outlook: Short term getting overbought
As indicated by our bullish CPO commentary on 27 March, Malaysian palm oil futures rallied 1.1% to RM3621/MT, a fresh 14-month high on Tuesday, as traders continued to make bullish bets on the edible oil after industry data showed healthy export demand and lower stocks.

MPOB said March’s inventory fell to 7-month low as export growth outpaced production whilst cargo surveyor data also pointed to higher exports for the first 10 days of April compared to a month ago as major importers including Europe, China and India ramped up buying.

According to monthly chart (FIG5), medium to long term outlook remain promising as indicated by bullish technical indicators. Nevertheless, we could see some pullback in the near term as daily and weekly technical indicators are getting overheated. Immediate resistance target is RM3760 (monthly upper Bollinger band and downtrend line) whilst long term targets are RM4000-4100. Short term retracement supports are 10-d SMA (RM3534) and mid Bollinger band (RM3467), followed by 10-w SMA (RM3375).

Uptrend will be disrupted if prices break below RM3400.

Daily CPO - Getting Overbought
CPO 12-04-2012

Weekly CPO - Resistance Near RM3750-3800 Zones

CPO 12-04-2012a

Source: HLIB Research

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