Benny Lee on BFM 89.9

Shares on Bursa Malaysia rose today, with the FBM KLCI gaining 0.6% to 1,266 points on a technical rebound, according to Benny Lee, Chief Market Strategist of NextVIEW. He believes that in the short term, upside potential for the market is very limited and looking at the FBM KLCI there is a strong resistance at 1,290-1,300 points. He advises investors should stay away from the market until the market corrects further.

Gold Analysis and Forecast

The long term potential for Gold is higher than what we’ll discuss in this article. My primary purpose here is to identify and confirm trend, and determine as best we can the logical price targets for gold during the month of November. The market continues to be very bullish, although there is evidence of temporary weakening momentum.

Click HERE to continue reading this analysis and forecast by Don Schellenberg

Commodities Bull

Prices of major commodities have found its footing in the past few months and the recent price actions and the weakening US dollar set to push prices of commodities to new highs. There are tell-tale signs that global economy is improving (at least that's what the analysts say) and demand for commodities is expected to increase to fuel the economy. Most commodities prices have broken out of the correction zone and I am expecting the bulls to pull the commodities market to fresh highs.

Crude Oil:
The price of Crude oil on NYMEX has just jumped above US74 a barrel, breaking out of the US$65 - US$64 correction range. It has a very high chance to rally into the regions of US$82 - US$85 region in the short term. It may even go to US$91 a barrel in the intermediate term of 6 months.

Gold
COMEX gold performance was extremely bullish as the price continues to make new historical highs. The price of Gold has came out of the correction period in early September and now has a price target of US$1,120 an ounce in the short term based on the triangle chart pattern price objective and US$1,300 in the intermediate term of 6 months.

Rubber
Price of Rubber has rallied quite strongly in the past few weeks and this bullish momentum is set to continue with a short term price target of JPY$230 a kg and an intermediate price objective of JPY$260.

Crude Palm Oil
Price of Crude Palm Oil has also showed strong support in the past two months and the increasing demand for this commodity has cause the price to start climbing. The bulls have just started to pull this market. Price is expected to hit RM2,400 in the short term and even climb to RM2,800 in the intermediate term of 6 months. See more detail analysis here.

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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.

Crude Palm Oil: Correction may soon be over, time to rebound and rally

In my article last month, I mentioned that the price of Crude Palm Oil Futures (FCPO) in Bursa Malaysia which was at RM 2,145 per metric ton at that time may only find support between RM2,000 and RM2,050. The price of FCPO fell to a low of RM2,013 on October 6 and rebounded to close at RM2,085 on October 9. With this close, the price of FCPO fell RM94 or 4% from a month ago. I also mentioned that once price goes to this support level, it may start to rebound and rally at least to RM2,300 in the intermediate term. Now that price is near this technical support area, there is a good chance for buying because risk is low.

The price of FCPO is still in a correction zone of a major uptrend, clearly defined by a triangle chart pattern since May this year. Price is currently below the short to long term 30 to 90 day moving averages. The averages are currently converging and this indicates that the correction may be over soon. The averages are between RM2,150 and RM2,230. Average daily trading volume has slightly reduced to 9,200 contracts last month from 10,400 contracts in the previous corresponding month. Selling pressure in the previous month has eased off.

The support level of the triangle pattern may be broken in mid of September at RM2,130 but the stronger support level, like I mentioned in my previous article is between RM2,000 and RM 2,050. Therefore, it is not considered as a broken support level and the correction is still intact. Currently, the support level remains at RM2,000 and the triangle pattern resistance level is RM2,300. Price is expected to reverse its uptrend if it breaks below the support level or continue its uptrend if it breaks above the resistance level.

Momentum indicators are slightly bullish now with RSI and Momentum indicators inching away above the middle level. The strongest sign of a bullish momentum is the MACD indicator which has just started to cross above its trigger line or its 9-day moving average. The only indicator that still indicates down trend is the ADX indicator. However, the ADX is the most lagging indicator.

The weekly chart shows a bullish reversal Japanese Candlestick pattern called the “Piercing Line”. The last time the chart showed a similar bullish reversal pattern on the weekly chart was on the week of July 17 and price rallied from RM2,120 to RM2,440 in four weeks. With the current pattern, price is highly expected to rebound out of the correction zone and rally upwards.

Price is expected to at least rally the next resistance at RM2,300 and even go higher to test the next resistance level at RM2,400. If the price of FCPO is ablt to overcome these resistance levels, the price of FCPO may even rally to RM2,800, but probably not this year. The forecast is valid only if the price of FCPO stays above RM2,000 and if this support level is breached, price of FCPO may fall further to RM1,900.


Daily FCPO chart as at 10 September 2009 using NextVIEW Advisor

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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.

Commodities: Rubber Price Analysis September

Rubber futures prices soared to 11-month in mid of September at JPY$218.4 per kg after breaking the JPY$214 resistance level in a second attempt but the rally failed to extend further. Price of rubber futures (RSS3) in TOCOM then pulled back 7% to close at JPY$199 on September 30 lower than the closing price a month ago. Rubber price fell JPY$12.7 or 6.8% month-to-month.

The short term 30-day moving average has started to decline since a week ago but the longer term 60- and 90-day moving average is still increasing. Price of rubber is above these two long term averages but below the short term average. The price action indicates an uptrend correction. The divergence between price and momentum indicators like RSI and MACD shows that the bears are still in control and therefore provide strong resistance for price to move higher.

Support level remains strong at JPY$190 and is this price level is broken, price may fall further to the next support level at JPY$176. If price can still maintain above this support level, there is a high chance that the price may rally to test the JPY$220 high again.


Daily TOCOM rubber futures price as at 30 September 2009 using NextVIEW Advisor

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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.

Commodities: Crude Palm Oil Analysis

Price of FCPO was not able to stay above the uptrend line last month as price continues to decline. The FCPO price fell RM169 per metric ton or 7.1% to RM2,186 in a month. FCPO and soyoil was going against the other commodities trend as the dollar weakens. The price of FCPO found support at RM2,070. The price has been trading in a range between RM2,070 and RM2,240 in the month of September. Exports were slowing down as inventories were increasing in importing countries amid lower consumption.

For more, click here and look for Market Insight

Crude Palm Oil: In a longer term correction

The market turned bearish last month after a short term bullish rally from RM2,000 per metric ton in July to a high of RM2,515 in just one month. It turned bearish when the price of FCPO tested and broke below the RM2,300 support level early September. I have mentioned that if this support level is broken, the price may hover around the averages at about RM2,100, from the intermediate up trend line from October 2008. The price of FCPO closed at RM 2,145 on September 11, RM319 or 13% lower from a month ago. The thought having the price of FCPO going to test RM2,800 again this year fades away.

The decline in palm oil prices were mainly due to decline in exports. Malaysia palm oil inventories were up at the end of August. MPOB reported palm oil stocks increased 6.2% on-month to 1.42 million tons. Malaysian palm oil exports declined due cutbacks in palm oil imports from the European Union and China. MPOB said that exports were down 9.5% on-month to 1.32 million tons in August. Cargo surveyors SGS Services and Intertek Agri Services estimated palm oil exports for 1 to 10 September to decline 17% and 15% on-month respectively. Favourable weather in Malaysia and India's Meteorological Department announcing a revival in monsoon rains may ease drought in India, boosting crop development. These fundamental provide resistance for the price of crude palm oil to move higher.

The price of FCPO has gone below the moving averages and the 30, 60 and 90-day moving averages have just started to decline. The averages are between RM2,200 and RM2,300. The FCPO price is currently right above the intermediate up trend line. Trading volume has slightly improved with a daily average of 10,400 contracts as compared to 9,200 contracts in the previous month and this indicates a selling pressure because of the price decline in the past one month.

Because the price did not rally upwards, a long term correction chart pattern called the “triangle” has formed and this can be easily identified on the weekly chart. The support level of the triangle pattern is currently at RM2,050 while the resistance level of this pattern is at RM2,400. Therefore, price is currently near the support level. As long as the price stays within this support and resistance level, the price is still in a correction. A breakout above the resistance level would cause the price to rally but a breakout below the support level would cause price to decline further.

Momentum indicators are mixed with a slightly stronger bearish strength. Indicators on the daily chart are bearish. The Relative Strength Index (RSI), Momentum indicators are below the mid-level. The MACD indicator is declining and is now below zero which means that the trend is down. The rising ADX indicator also shows strong bearish trend. However, in the longer term, momentum indicators on the weekly chart are mixed where the indicators are almost neutral.

Price is currently near the support level and a rebound is expected at around RM2,000 to RM2,050 to at least the average price in the correction period and that is RM2,300. In the longer term, the price trend direction depends on whether the price breaks above the support or resistance level. In the short term, the FCPO price is expected to stay between this support and resistance levels. If FCPO price is unable to stay above RM2,000 and breaks below it, the price is expected to fall and test the next support level at RM1,700. If price breaks above RM2,400 resistance level, then we may expect price to rally to test the RM2,800 resistance level again.


Daily FCPO chart as at 10 September 2009 using NextVIEW Advisor

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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.

Gold Analysis by Don Schellenberg

Price action on the Gold chart has been creating a very clear triangle, which has developed over the past six months.

A test of the July low, around $900 per ounce cannot be ruled out. That in itself would not prevent price from subsequently rising dramatically to the upside.


(Read more here)

FCPO analysis - RM 2,800 again?

A month ago, I have expected the price of FCPO in Bursa Malaysia to have a bullish bias and test the resistance level of RM2,300 per metric ton because that was the long term 90-day average. The price then was RM 2,020. After facing some resistance at RM 2,340, the price of FCPO continue to climb and went as high as RM2,515 one day before this article is written. The price of FCPO pulled back to close at RM2,441 on 14th August because of sharp overnight fall in the price of soyoil and FCPO in the Dalian Commodity Exchange. The correction has formed a bearish reversal chart pattern based on Japanese Candlesticks analysis. So, question is, is the price of FCPO going to correct further downwards?

Minister for Plantation Industries and Commodities Bernard Dompok said on Friday that August inventories for palm oil may remain unchanged from a month earlier at 1.3 million tons. Cargo surveyors Intertek Agri Services and SGS (M) Bhd are due to announce Malaysia palm oil export for 1-15 August in the next few days but traders are expecting shipments to increase 1% from the same period last month. Demand from China, which is Malaysian main palm oil importer remains unchanged despite worrying economy. Weather forecasters are seeing developing El-Nino weather patterns towards the end of this year.

The FCPO price uptrend may be able to be sustained because of the strong fundamentals. Technically, the price of FCPO is still in an uptrend. The price is above the short to long term 30, 60 and 90-day moving averages. Price is just slightly higher above the averages and volume has been slightly increasing in the past one month. The 90-day average is currently at RM2,380. While the 60-day average is at RM2,293. The rebound from the recent low of RM2,000 confirms the intermediate up trend line (S1 on the chart).

Momentum indicators are showing strength in the current rally. The Relative Strength index (RSI) Moving Average Convergence/Divergence (MACD), Momentum and Average Directional Index (ADX) indicators are all making new highs. The strong momentum shows strong support and less resistance and therefore there is a high chance that price can climb higher. Therefore the pullback on Friday may be short-lived with a mild correction and the uptrend is expected to resume. So, this answers the question in the first paragraph.

The short term support level is at RM2,300 (the 60-day average) and this is where the price is likely going to be supported in the current pullback. If the price of FCPO can stay above this level, then expect price to continue to go higher and test the RM2,800 resistance level within this year. So there you go, based on technical analysis, I am currently bullish in the price of FCPO and RM2,800 can be tested again and this answers the title for this analysis.

There will be resistances along the way especially at RM2,600. However, if price falls below RM2,300, further sideways correction is expected as price should hover around the averages if there not much developments in the industry or when the market is uncertain.


Daily FCPO chart with RSI and volume indicators as at 14 August 2009 using NextVIEW Advisor

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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.

Rubber price - bullish

The price of rubber has been trading sideways between $150 and $180 for more than three months in the month of April through mid July. The price went above the $180 level just a week ago, indicating that the correction is over and the bulls are taking charge. The price trend is generally up as the long term 90 day has been increasing since April. The short term 30 and 60-day moving averages have now started to converge with the long term average after declining for more than two months.


Daily Rubber (TOCOM Rubber futures) chart with volume as at 31 July 2009 using NextVIEW Advisor Professional

The breakout of the correction period is supported by strong bullish momentum. The RSI, MACD and Momentum indicators are making new highs and this means that there is a high chance that the price may continue to go higher. Based on a chart pattern formation, the immediate price target for rubber is $210 with an extended target at $230, based on a Fibonacci retracement level of 50% from the long term bear trend that started in mid-2008. Support level is current at $180, the previous resistance level that was broken. If the price falls back below $180, then we may expect price to move sideways again.

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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.

Crude Oil Analysis - Bullish

Up trend developing steadily. The NYMEX (New York Mercantile Exchange) Crude Oil price has developed a healthy up trend since the steep fall from US$145 in July last year to a low of $35 earlier this year. The current price is $69.50. The price movement has formed an up trend line supported by the pivot low in early this year and the recent pivot low 3 weeks ago. The price is also being supported by the 15 and 30-week moving average which has now crossed to form a bullish reversal in the long term.


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

The up trend is supported by good bullish momentum indicated by increasing highs from the RSI, MACD and Momentum indicators. With this strong momentum, there is a high chance that the prices of crude oil to create a new high for this year and possibly test the resistance level at $77, based on a 38.2% Fibonacci retracement level from the long term bear trend. Support is at the up trend line and moving averages at $60.

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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.

Gold Price Analysis

Technically gold is still in a long term uptrend. This is true despite the fact that the high of 1033.90 on February 20, 2008 has not yet been exceeded. Near term, however, say for the month of August 2009, the outlook is not so bullish. In February 2009 there was a test of the 2008 high. The market rejected the attempt but the resulting decline was relatively modest in US dollar terms. Another attempt to test the high may be underway at this time but the attempt appears to be struggling.

Bullish factors – Gold closed higher on the monthly chart during 2009 than in 2008, but with a lower high. The monthly close in May was the highest is modern history, but without a higher high. The persistent uptrend that began in 1999 has already had a correction of almost 50%. The move up from October 24/08 to February 20/09 was strong.

Bearish Factors – Recent fluctuations in value have been corrective rather than trending. The 7 month old rising trend line has been broken to the downside. Third failure to reach a new high will have bearish implications.


Daily Gold chart as at 30 July 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
Most popular indicators on monthly and weekly charts are in positive territory, but with low momentum.

MACD – flat at 50

NextView RSI – at 50 level

Stochastic – declining from Over Bought.

SMA 200 – at 880., rising slightly

EMA20 – flat, above current price

TL1- seven month old trend line, which has been penetrated to the downside and is now being tested.

TL2 – five month declining trendline.

R1 – resistance level at 966.70 R2 – 1007.70

S1 – Nearby support at 904.80 S2 - 865.60 S3- 806. (not shown on chart)

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Price of FCPO expected to trade sideways with a bullish bias

The price of FCPO (Crude Palm Oil Futures on Bursa Malaysia) continues to fall as I have expected in the past one month but fell lower than expected. There is a technical support level between the price range of between RM2,100 and RM2,200 per metric ton but the FCPO went as low as RM1,990 from RM 2,400. The price rebounded and is now at RM2,020. However, the market did rebound temporarily from RM2,150 to RM2,340 from 22nd to 26th June before making its way down again.

Tree replanting efforts is being continued by the government may caused production to fall further in the coming months and cut more supply to the already shortage in current palm oil supply to the market. Plantation Industries and Commodities Minister Bernard Dompok is confident optimistic about higher oil price in the months ahead. Cargo surveyors SGS Malaysia and Intertek Agri Services estimated a 15% and 18% on-month increase in the July 1 to 15 period. Fundamentally, price of FCPO should increase as the cut in supply and increasing demand may push prices higher.

The market has provided a good trading range for traders. The 14-day average true range (ATR) which measures volatility is 75 points or 3.6%. However, average trading volume has been declining but the average open interest is increasing. This simply means more traders are sitting on open positions for a longer term rather than trading them short term in the market. The 30-day average volume was 9,200 contracts, 15.6% lower than the previous month’s average. The average volume has been declining for two consecutive months.

The price of FCPO was still in an up trend last month when it is above RM2,300 (which is the 90-day moving average). At current price, the trend is now down. The 30- and 60- day moving averages have just started to decline. However, the current down trend seems week because momentum indicators are in divergence with the trend. The Relative Strength Index (RSI) indicator pivot lows are higher despite lower FCPO pivot lows. The Average Directional Index (ADX) which was increasing since mid-June has started to decline as well, indicating a weak down trend momentum.

The long-term average is currently between RM2,100 to RM2,300 and therefore price is currently slightly below this long term average range. With the current bullish momentum and positive fundamentals, the price of FCPO has a high chance to move higher and probably test the upper level of the trading range which is RM2,300 if the price is able to break above the immediate resistance of RM2,150. So, expect price to be trading sideways with a bullish bias. Current support level is RM1,950 and if this level is broken, the next support level is at RM1,800.


Daily FCPO chart with volume as at 16 July 2009 using NextVIEW Advisor Professional

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.

Trading the Crude Palm Oil Futures

The price of FCPO made a new pivot low after rebounding to a high of RM2,650 per metric ton early June. Since then the price of FCPO fell 19% in one month. FCPO price tested and broken the support level at RM2,350 before closing at RM2,150 on the 22nd of June. However, it rebounded and closed at RM2,317 on the 26th of June. The FCPO is back in a down trend after enjoying an uptrend since the beginning of this year when it broke the bottom line of the uptrend channel.

The price is now at the long term average price, defined by a 30-week average. The price is also at the 90-day average. The down trend has formed a linear down trend channel (please refer to chart below). The price is currently in the middle of the channel. The down trend is considered strong technically because the momentum indicators like the RSI and MACD are in convergence with the lower pivot lows and pivot highs.

Traders can trade within the down trend channel (See chart below). The top line of the channel which acts as resistance is currently at RM2,450 and declining and the bottom support line is at RM2,100 and declining. Going short at resistance level is preferable because the down trend momentum is stronger. There is no opportunity to trade at current level because the price is in the middle of this down trend channel.

It may be quite difficult to trade at current price when it is at the long term average because price may go sideways. So, it may be able to move into the support and resistance levels of the down trend channel. If the trader trades in this market, a stop loss should not be less than RM80 as the 3-period Average True Range (ATR) is averaging at RM80. For a safer stop, the stop loss should not be less than RM120, which is 1.5 times the ATR.


Daily FCPO chart with volume as at 26 June 2009 using NextVIEW Advisor Professional


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.

Crude Palm Oil Futures: May test support levels around RM2,100 to RM2,200

In my article last month, I mentioned that there is a strong resistance for the price of FCPO (Crude Palm Oil Futures) at RM2,800 per metric ton and if it is not broken, the price may pull back to its long term average at around RM2,000. That was when the price of FCPO was at RM2,700 and today it is at RM2,400. The news about rising imports and Indonesia tax on CPO did not have impact on the price of FCPO and I was still convinced that the price of FCPO need to be corrected downwards because the price is overbought. The price was quite volatile last month. From RM2,700 it went to a low of RM2,350 before rebounding back to RM2,650. However, the rally was not sustainable and price fell to the current level of RM2,400.

FCPO traders are concerned about the demand sustainability and rising US dollars which may weaken the price of FCPO. The Malaysian Palm Oil Board says in official report that Malaysian crude palm oil exports rose 2.3% on-month to 1.22 million metric tons in May. However, estimates from cargo surveyors expect a drop in export estimates for the first half of June. Intertek Agri Services estimated a fall of 10 percent in exports while SGS expected a fall of 9.4 percent.

Trades have already started to look for positive catalysts to boost CPO price but the lack of strong fundamental data caused traders to continue staying out. Trading volume was relatively weaker as traders are still looking for cues from the market. The cue was pretty obvious last week when price was high and if only they knew how to read charts or this article last month, they would at least know the market vibration and know where it is heading.

The price of FCPO is currently in a correction period but is still in a long term up trend as long as it maintains above the 90-day moving average (90-SMA) which is currently at RM2,260. There is a temporary support level created last month at RM2,350. The momentum in price and volume is getting weaker. The Relative Strength Index (RSI) continues to make new lows while the Average Directional Index continues to decline. These indicators indicate weaknesses in price momentum. Daily average volume in the past one month was 10,900 contracts, 14 percent lower than the previous corresponding month.


Daily FCPO chart with volume as at 15 June 2009 using NextVIEW Advisor Professional

The longer term average for the price of FCPO has increased from RM2,000 to RM2,100 per metric ton. The weak momentum suggests that price may continue to fall and test the support levels. There is another support level that can be defined from the October 2008 to date rally which currently around RM2,100. The price of FCPO may soon test the immediate support level at RM2,350 and if this support level is breached, then the price of FCPO may test support levels around RM2,100 to RM2,200.

Strong resistance maintains at RM2,800 while immediate resistance level is at RM2,650. These two resistance levels can be connected by drawing a linear trend line which defines the current short term down trend and if this line is broken, we may see the price of FCPO going sideways.

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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.

Price of Gold anticipated to pause briefly

Two weeks ago I announced that if the market had sufficient strength and momentum to breach R1 (950-960) convincingly, R2 (976) would be the next logical upside target. That target was surpassed and there is now a three month high at 990.

Price is currently at 969.50. I anticipate that gold will pause briefly with sideways activity before a testing the February 20th, 2009, high of 1006. and the March 17th, 2008 high of 1032.50.

A downside break below 930. would force a reconsideration of this outlook.


Daily Gold chart as at 4 June 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
MACD – in positive territory with weakening momentum
Stochastic – dropping down from it’s overbought level.
Li’s Sandwich – the top line indicates potential resistance, and the bottom line indicates potential support.
R1 – immediate resistance at 990.
R2 – 2006
S1 – a zone of support from 946-930.
S2 – 912.

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Price of Gold rapidly moving into resistance level

Gold is rapidly moving closer to last week’s #2 resistance target. (R1 on today’s chart). That is also the top of the parallel channel.

This resistance level is sufficiently strong that I expect some downward pressure from there. It is an important level to watch, and for some traders to consider taking at least partial profit off their positions.

If there is sufficient strength and momentum to breach R1 convincingly, then R2 will be the next logical upside target. Failure to penetrate R1 could result in a multi-day retreat downwards.


Daily Gold chart as at 21 May 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

SMA200 – rising weakly around 867
EMA20 – rising strongly
Stochastic – overbought and rising
Li’s Sandwich – indicates resistance around the R1 level on the chart.
R1 – immediate resistance at 950-960.
R2 – 976
S1 – 917
S2 -900

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Crude Palm Oil: Strong Resistance at RM 2,800

The price of crude palm oil in the futures market (FCPO) has been very bullish in the past one month, despite being overbought and having a technical resistance at RM2,540 per metric ton. The price of FCPO surged RM204 or 8.3 percent on-month. It went as high as RM2,799 twice this month but failed to break above this level before settling at RM2,663 on Friday. The surge in price was a result of speculation because of improving export figures. The price has retraced to almost 50 percent from the high of RM4,486 in March 2008 to a low of RM1,331 in October 2008.

The weakening price movement in the past few days despite strong fundamental factors shows that the market has already anticipated these factors and is already discounted in the current price. There is a strong resistance at RM2,800 and to go beyond this level, the market needs a much stronger catalyst to boost the price of CPO.

The price of FPCPO is still in a very strong up trend, but a little weaker from last month. The short and long term 30- and 90-day moving average is still up but the price is getting nearer to the short term average. The weaker momentum is also detected in momentum indicators like the Relative Strength Index (RSI) and the Average Directional Index (ADX). Both these indicators’ values are declining. The daily average volume for mid-April to mid-May is 12,700 contracts, a 44 percent increase from the previous corresponding month. The high increase in volume with price not getting higher also indicates that the price of FCPO is toppish.

The price of FCPO is currently 21.3 percent above the 15-week moving average. It was 23 percent above this average last month. The decline in the price momentum this week was the first in eight weeks. The 15-week average is currently at RM2,194 while the longer term average (30-week average) is at RM1,910. The presence of “doji” Japanese Candlesticks chart patterns in the past two weeks on the weekly chart shows that the market is toppish and a correction is likely going to happen.

The resistance at RM2,800 is strong because it was tested twice this month without being able to break above it. With weaker bullish momentum and toppish price patterns, the price of FCPO is expected to go into a downward correction this month, with a higher confidence. The price is expected to pull back to the averages between RM1,900 and RM2,200. Therefore a sharp pull back is expected. There is a saying in the market that if price goes up sharply, it falls sharply also.


Daily FCPO chart with volume as at 15 May 2009 using NextVIEW Advisor Professional

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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.

GOLD Analysis - Price Correction

It’s my view that the strong up-move that began in mid-November, 2008, was actually part of a larger corrective formation. In fact all of the movement of Gold since then, both up and down, has been corrective in nature.

If that is the case, in not too many weeks we should begin to see a decline in gold value below the recent low set on April 17th at 864.50.

Meanwhile, however, the market is rising. The first upside target is the top of the rising channel which is currently around 936. A further rise to around 950 is a real possibility. These areas should exert significant resistance. If and when the market reaches there we should pay careful attention to the market reaction, whether positive or negative.


Daily Gold chart as at 7 May 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
NextView RSI – rising
Stochastic – rising
Li’s Sandwich – the outer bands indicate possible levels of support and resistance.
Channel – the channel creates a natural first target for the rise in gold’s value.
R1 – nearby, relatively weak resistance, at 918.50
R2 – 935.
R3 – 951.
S1 – 880.50
S2 – 864.50

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

Oil Price Analysis by Daryl Guppy

Oil has developed a trading and conciliation band behaviour. This is clearly observed on the NYMEX (New York Mercantile Exchange) Crude Oil weekly chart. The width of the band is now defined by the resistance level that developed near $53.00. This is a little distance below the historical resistance level near $56.00. The lower edge of the trading band is near $33.00.

Towards the end of 2000 oil developed an equilateral triangle pattern. This is a pattern of indecision. The breakout from this pattern has a 50% probability of moving up or down. The important development of this pattern has been the price behaviour in relation to the middle point of this pattern. The middle point or apex, of this triangle pattern is located near $42.00.

The breakout from this equilateral triangle was not very successful and resistance developed near $53.00. The way the market retreats after the breakout gives a good indication of how this long term trend will develop.

It is a bullish condition when the market retreats to $42.00 and finds good support. A rebound from this support level has a high probability of successfully testing resistance near $56.00. A very strong rebound has the ability to move higher and retest resistance near $70.00.
If support near $42.00 is not successful then the market will fall to retest support near $33.00. This is a bearish outcome and suggests that oil will continue to trade inside the trading band for many months. This would develop a long term consolidation pattern between $33.00 and $56.00.

The price move from $33.00 to $42.00, or higher to $56.00 gives many profitable trading opportunities. It is important to remember this is part of the normal pattern of rally and retreat behaviour inside a trading band. Price can fall very quickly from resistance near $56.00.

A long term change in the trend will develop when the price is able to move above resistance near $56.00. This is currently a low probability because the value of the long term Guppy Multiple Moving Average indicator on the weekly chart is near $56.00. This shows a strong resistance level. On the daily chart the long term GMMA shows the uptrend pressure is weak.

For the next several months oil may continue to trade in the upper area of the trading band between $42.00 and $56.00 but there is a low probability the price will successfully move above $56.00. Price may fall below $42.00 but there is a reduced probability the price will continue to fall all the way to $33.00 so traders will be ready for a price rebound to develop.



To read more articles and commentaries from Daryl Guppy, click HERE

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Daryl Guppy, well-known international financial technical analysis expert. Appears regularly on CNBCAsia and is known as "The Chart Man". He is an equity and derivatives trader and author of books including Share Trading, Trend Trading and The 36 Strategies of The Chinese For Financial Traders. He has developed several leading technical indicators used by investors in many markets. His weekly analysis newsletters get favorable comment in Asia and Australia.