Crude Palm Oil Analysis - bullish

The price of FCPO went under the long term 90-day average last month and continues to move downwards within the down trend channel defined by the S1 and R1 lines in the chart below. The price went to the support level at S1 in mid-July at around RM 1,990 per metric ton and created an opportunity to go long. At this point, the RSI was in a divergence in with FCPO down trend. The price then rallied to the current level at RM 2,189. For those who are able to long at the support level there is a RM100 opportunity in half a month.

Now, the price of FCPO is at the resistance level of the down trend channel and slightly below the 90-day moving average which is currently at RM2,350. The momentum indicators are diverging against the current down trend. The RSI, MACD and Momentum indicators are rising when price is falling. This means that the down trend is weak and a trend reversal is expected.
The price of FCPO is currently at the long term average, defined from the 15 and 30-week average. With a bullish momentum forming, the current level may be attractive in the long term. The short term down trend may change its course.


Daily KLCI chart with volume as at 31 July 2009 using NextVIEW Advisor Professional

Although price is currently at the downtrend resistance level, there is a high chance of price moving higher because of the developing bullish momentum and especially if it breaks above the immediate resistance level which is currently at the RM2,250 and rally to the next resistance level at RM2,350. A more optimistic level is at RM2,800.

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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.