The price appreciation of the CPO futures has been very aggressive since it disconfirmed the “Double Peak” bearish formation by returning back above the “Neckline” at the RM2,393 / tonne level. Recall that we said the “Double Peak” looks like a classic one that took about 6 months to complete. Theoretically, the accuracy of the structure should be very high. However, the return back above the “Neckline” wrote off that possibility and we believe this has invited massive short covering.
The near-term technical outlook of the CPO futures has become bullish since it returned back above the “Neckline”.
The market is now testing the “Double Peak” at the RM2,726 / tonne level. This is a very tough resistance. Should this level be violated, another very tough resistance lies at the RM2,799 / tonne level. To the downside, there is immediate support at the RM2,610 / tonne level, followed by the RM2,571 / tonne level.
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