Tuesday, April 01, 2008

CPO is violating its uptrend line

At the end of the morning session today, CPO closed at RM3078 per tonne. At that price, CPO has broken below its medium-term uptrend line support at RM3300. In fact, it is lower than the low of RM3200 recorded last week (see Chart 1 & 2 below). A quick recovery above the RM3300 is important, failing which the current CPO's uptrend is deemed over.


Chart 1: CPO's daily chart as at March 31, 2008 (source: ifs.marketcenter.com)



Chart 2: CPO's weekly chart as at March 31, 2008 (source: ifs.marketcenter.com)

Like CPO, Soya Oil has also violated its medium-term uptrend line support at 57 two days ago. Yesterday, it went below the low of 54 recorded last Friday. Again a quick recovery is very important, failing which Soya Oil could slide off to its long-term uptrend line support at 42-43.


Chart 3: Soya Oil's daily chart as at March 31, 2008 (source: futures.tradingcharts.com)



Chart 4: Soya Oil's weekly chart as at March 31, 2008 (source: futures.tradingcharts.com)

The present weakness in CPO is likely to drag down the prices of plantation stocks. Be careful when you buy into the present correction in some of the plantation stocks.

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