Price of Crude Palm Oil is Set to Rally

The price of crude palm oil was in a correction period since November 2008 and the correction has formed a "triangle" chart pattern. Just 2 trading days ago, the price broke above the resistance line of the triangle and stayed above it for 3 days. The breakout would likely going to send the price of Crude Palm Oil Futures (CPOF) into an up trend rally in the short term.

Price of many commodities have started to rise in the past few weeks because governments around the world's effort in lowering key interest rates to boost the economy by encouranging spending in the slowing economy. Price of commodities have been severely hit since July 2008 when financial crisis hit the west and speculations of slowing economies worldwide. I believe that the price of commodities, including crude palm oil were over-speculated and a rebound can be strong.

The increasing Relative Strength Index (RSI) indicator indicates that the bullish momentum is present during the correction period for the price of crude palm oil and this provides further confirmation that the price is well supported. The strong support level is RM1,400 per metric ton (MT).

The immediate price target for the price of CPOF is at RM2,100/MT, based on the the triangle pattern price objective. The price is currently at RM1,740. There is a RM 350 potential upside for this commodity. A pull back in price to about RM1,650 is a lower risk entry. This is the level where the resistance line of the triangle is.


Daily CPOF chart as at 2 January 2009 using NextVIEW Advisor. Click on chart for larger view.

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The article above was published in Smart Investor December 2008 issue and is modified with current information. Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.