CPO prices likely to move higher

From the two daily charts below, it appears that CPO prices are poised to move higher. From Chart 1, we can see that CPO prices are consolidating within the Bollinger Bands for the past 2 months. A break above RM1670 could signal an expansion in the Bollinger Bands towards the upside.


Chart 1: CPO's daily chart (overlaid with Bollinger Bands, Parabolic SAR & Stochastics) as at Dec 30, 2008 (source: ifs.marketcenter.com)

From Chart 2, we can see that the CPO prices may have broken to the upside of the symmetrical triangle that enveloped the price movement over the past 2 months. The ADX indicator is supportive of a move to the upside for CPO prices.


Chart 2: CPO's daily chart (overlaid with Parabolic SAR, CCI & ADX) as at Dec 30, 2008 (source: ifs.marketcenter.com)

Finally, the weekly chart (Chart 3) shows that the Parabolic SAR (short for 'stop-and-reversal' indicator) has moved below the price. This positive sign, coupled with the breakout of the symmetrical triangle is supportive of high prices for CPO going forward.


Chart 3: CPO's weekly chart (overlaid with Bollinger Bands & Parabolic SAR) as at Dec 30, 2008 (source: ifs.marketcenter.com)

Based on the above, we should try to accumulate some good plantation stocks, such as IOI, KLK & Asiatic in order to gain from the recovery in CPO prices.