The CPO market is now consolidating the aggressive price rally it enjoyed after violating the RM2,700- RM2,800 major resistance level. CPO price has added about RM800 / tonne in a matter of a month.
Although the market gapped down by RM75 / tonne last Thursday and the price continued to tumble further by as much as RM151 / tonne, bargain hunters subsequently entered the market to support prices. The rebound was aggressive as the market even closed the intra-day gap during the day and ended only RM53 / tonne lower, recouping more than 50% of its losses from the worst level.
Last Thursday’s price action could potentially be a reversal signal for the recent consolidation phase. We have drawn a dotted downtrend line in the above daily chart. A break above this trend line would signal the end of the price consolidation and also confirm the market’s intention to stay above the RM3,000 / tonne mark, as indicated by last Thursday’s impressive rebound from the day-low.
Anyhow, whether the market will continue to rebound from here and eventually break above the downtrend line, or the price may continue to retrace further, will not alter our bullish bias view towards the CPO futures market. Both near-term and mid-term technical outlooks of the CPO market will remain bullish as long as prices stay above the RM2,700-RM2,800 / tonne area. The fast appreciation of CPO prices of late basically reaffirms our view that the breakout from the RM2,800 / tonne level had substantially improved the futures market’s technical landscape.
Although the market gapped down by RM75 / tonne last Thursday and the price continued to tumble further by as much as RM151 / tonne, bargain hunters subsequently entered the market to support prices. The rebound was aggressive as the market even closed the intra-day gap during the day and ended only RM53 / tonne lower, recouping more than 50% of its losses from the worst level.
Last Thursday’s price action could potentially be a reversal signal for the recent consolidation phase. We have drawn a dotted downtrend line in the above daily chart. A break above this trend line would signal the end of the price consolidation and also confirm the market’s intention to stay above the RM3,000 / tonne mark, as indicated by last Thursday’s impressive rebound from the day-low.
Anyhow, whether the market will continue to rebound from here and eventually break above the downtrend line, or the price may continue to retrace further, will not alter our bullish bias view towards the CPO futures market. Both near-term and mid-term technical outlooks of the CPO market will remain bullish as long as prices stay above the RM2,700-RM2,800 / tonne area. The fast appreciation of CPO prices of late basically reaffirms our view that the breakout from the RM2,800 / tonne level had substantially improved the futures market’s technical landscape.
From the current level, there is immediate resistance at the recent high of RM3,452 / tonne while the next very tough resistance for the CPO market is seen at the RM3,750 / tonne level. On the downside, there is initial support at the RM3,114 / tonne level, followed by the psychological RM3,000-mark.
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