Plantation index broke above its downtrend line

CPO has tested the accelerated downtrend line (R1-R1) at RM3350 yesterday. An upside breakout above R1-R1 would precede the test of the 2 months old downtrend line (RR) at RM3500. A break above RM3500 could sign the recovery in CPO prices. The indicators have slowly turned upwards.


Chart 1: CPO's daily chart as at March 30, 2011 (Source: ifs.marketcenter.com)

Plantation index chart is more positive than the CPO chart. It has broken above its accelerated downtrend line (R1-R1) at 7700 on March 18. Today, Plantation index broke above its 2 months old downtrend line (RR) at 7750. It also broke above the horizontal line 7780. With these double breakout, I believe plantation stocks are poised to a strong recovery in the days ahead.


Chart 2: Plantation's daily chart as at March 31, 2011_3.00pm (Source: Quickcharts)

From Chart 3 below, we can see that the Plantation index has recently tested its long term uptrend line at 7450.


Chart 3: Plantation's daily chart (on Log Scale) as at March 31, 2011_3.00pm (Source: Quickcharts)

Based on the bullish breakout if the Plantation index, I believe plantation stocks are good for medium-term trades. This is especailly so if the CPO index can also break above its downtrend line at RM3500.