OBSERVATIONS: The Kuala Lumpur CPO futures market took a pause
for breath last week, a welcome respite for market players battered by
this market’s plunge from around the RM2,700 a tonne level since the
beginning of this year.
Light buying by market players heartened
by better-than-expected export estimates and short-covering to nail down
profits ahead of the extended weekend (the market is closed today for
the Federal Territories Day public holiday) helped lift and kept this
market above the psychological RM2,400 level. Thus, although this
market fell in early trade to a 10-week low of RM2,393 a tonne, it
managed to claw back much lost territory before closing last Friday at
RM2,442 a tonne, basis the actively-traded April 2010 contract, still
down a nominal RM13 over the week.
Export monitors Societe
Generale de Surveillance (SGS) and Intertek Agri Services (IAS) put
January 1-25 exports at a total combined average of some 1.21 million
tonnes, up a whopping 205,490 tonnes or 20.43 per cent compared to that
shipped out in the corresponding period in December 2009.
this market still is far from out of the woods.
The news from foreign edible oil markets was still overwhelmingly
The strength of the US dollar also is acting as a
depressant factor. The greenback, in which world trade in palm oil is
quoted and transacted, has strengthened some 7 per cent against the
world’s other major currencies since December last year.
Much of whether this market can maintain last week’s posture and keep
its nose above the psychological RM2,400 a tonne level depends on the
commodity’s January 2010 export performance – or specifically, whether
it can maintain the scintillating form displayed in its January 1-25
export performance. The January 2010 export estimates should be public
knowledge by now and should impact on tomorrow’s trading action.
immediate technical overhead resistance and support levels are RM2,510
and RM2,400 respectively.
HOW TO USE THE CHARTS AND
THE BAR AND VOLUME CHART: This is the daily
high, low and settlement prices of the most actively traded basis month
of the crude palm oil futures contract. Basically, rising prices
accompanied by rising volumes would indicate a bull market.
MOMENTUM INDEX: This line plots the short/medium-term direction of the
market and may be interpreted as follows:
(a) The market is in an
upward direction when the line closes above the neutral straight line
and is in a downward direction when the reverse is the case.
loss in the momentum of the line (divergence) when prices are still
heading up or down normally indicates that the market could expect a
technical correction or a reversal in the near future.
RELATIVE STRENGTH INDEX: This indicator is most useful when plotted in
conjunction with a daily bar chart and may be interpreted as follows:
(a) Overbought and oversold positions are indicated when the index
goes above or below the upper and lower dotted lines.
and resistance often show up clearly before becoming apparent on the bar
(c) Divergence between the index and price action on the
is a very strong indication
that a market turning point
The subject expressed above is based purely on
technical analysis and opinions of the writer. It is not a solicitation
to buy or sell.