Crude Palm Oil price bullish but waiting for a break out

My last commentary for the Crude Palm Oil Futures (FCPO) was two months ago on 13 January when price of FCPO was at RM1,988 . I'd expect the price of FCPO to climb to RM2,400 to RM2,500 of the FCPO can stay above RM1,800. However, in the next two months, the price traded in a sideway range between RM1,740 and RM2,000. The price if FCPO is currently at RM1,902.

The up trend is very well intact because price is above both short and long term 30 and 90 day moving averages. The longer term 90 day average is at RM1,726. However, the strong momentum last month has started to weaken. The ADX indicator has started to decline and the RSI indicator swings stay flat. Average trading volume for FCPO remains the same as last month.

The price action for the past three months has formed a chart pattern called “ascending triangle”. The triangle pattern indicates that price is in a correction. The correction has an upward bias because of rising support levels (The term “ascending” refers to rising support levels). When the close price breaks above RM 2,000, it confirms the continuation of the up trend, with a price objective of RM2,260, same as the target price I set last month.

The momentum would start to get strong if price breaks and close above RM2,000 and this could push price of FCPO to RM2,260. If price can’t break above this level, expect price to trade between RM1,730 and RM2,000 this month.


Daily FCPO chart as at 16 March 2009 using NextVIEW Advisor. Click on chart for larger view.

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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.