CPO may face technical selling


CRUDE PALM OIL 

MALAYSIA Derivatives Exchange (Mdex) crude palm oil futures prices failed to expand on its upward momentum last week and slipped on moderately active long-liquidation pressure below the RM1,600 a tonne level for the second time in two weeks.  

The market rebounded on light technical buying towards Thursday’s close and finally settled the week with small losses.  

Bullish traders found various reasons to unwind positions ahead of the extended holidays for the Chinese New Year. 

Weaker soyoil prices on the Chicago Board of Trade and lower Malaysian palm oil exports for January at 860,418 tonnes from 977,595 tonnes in December, as reported by cargo surveyor Intertek Testing Services (ITS), prompted long position holders to square off positions. 

The benchmark third-month April 2003 futures trended downwards from an intra-week high of RM1,641 to RM1,592 and settled the week off from its week's low at RM1,619, off RM8 per tonne from previously.  

Based on chart, the April 2003 crude palm oil futures closed the week neutral-to-slightly negative and are expected to stay under renewed selling pressure during the three-day trading week.  

The sharp drawback last week at one stage resulted in the market returning almost all of its previous week’s gains and indicated that the underlying strength of the market is weak. 

Chart-support for this week stands at the RM1,600-RM1,590 level.  

Breaching of this important chart-support would signal that the bearish trend is continuing.  

Minor chart support for this week is seen at the RM1,570-RM1,550 level.  

Overhead chart resistance for this week is expected at the RM1,625-RM1,635 level.  

Failure to vault this trading barrier successfully could result in another wave of technical selling this week. 

The daily technical indicators finished the week bearish and signalled the prospects of further sideways-to-lower fluctuations this week.  

The daily stochastics turned bearish on Jan 28 and signalled an end to the upward cycle.  

The oscillator per cent K and D finished the week sharply lower at 54.40% and 68.21% respectively.  

Analysis of the daily oscillator shows that the market is in a bearish cycle and this downward bearish trend could extend into this week’s trading. 

The 3-day and 7-days exponentially smoothed moving-average price-line (ESA-line) triggered the sell-signal on Jan 29 and indicated that a bearish cycle had started.  

The 3-day and 7-day ESA-lines settled the week lower at 1,620 and 1,622 points, respectively. 

The daily moving-average convergence/divergence (MACD) triggered the sell-signal early last week and remained bearish during Thursday’s close.  

The daily MACD settled the week below the trigger-line and ended the week lower at minus 2.44 points and minus 1.42 points respectively.  

Analysis of this oscillator indicates that the market is in a downward phase.  

The daily momentum index (MI) retained its position below 100-point mark during Thursday’s close and finished the week slightly higher at 99.94 points.  

Analysis of MI shows that the market is in negative cycle.  

SOYOIL 

SOYOIL futures at the Chicago Board of Trade (CBOT) ended Wednesday moderately lower on heavy fund long liquidation pressure prompted by forecast for rain in Argentina’s main soybean growing region where most of its crop is in its critical pod setting and is most vulnerable to hot, dry weather conditions.  

The March 2003 futures prices declined from a week's high of 20.86 US cents to 20.15 US cents and rebounded marginally to close Wednesday slightly lower at 20.33 US cents, off 0.20 US cents per lb from a week ago. 

Based on chart, the March 2003 soyoil futures prices closed the week neutral-to-slightly bearish and are expected to remain under pressure this week.  

Chart resistance for this week is revised lower from a week ago to the 20.50-20.60 US cents per lb levels.  

Failure to trade above these levels this week could result in the market turning south.  

Chart-support for this week is seen at the 20.10-19.90 US cents levels.  

Violation of these January-lows would signal the continuation of the downward wave which started a week ago. 

The daily technical indicators ended the week mixed and suggested more downside trading this week.  

The daily stochastics triggered the sell-signal of Jan 28 and settled Wednesday on a bearish note.  

The daily oscillator per cent K ended below the oscillator per cent D and closed sharply lower at 51.21% and 68.07% respectively.  

Analysis of the daily stochastics shows that the market could resume its sideways-to-lower trend this week. 

The daily moving-average convergence/divergence (MACD) retained its buy-signal of a week ago and signalled that the market’s immediate trend is still positive.  

The daily MACD closed above the trigger-line and settled slightly higher at minus 0.26 and minus 0.29 of a point respectively.  

The 3-day and 7-day exponentially smoothed moving-average price lines converged and triggered the sell-signal on Jan 28.  

The 3-day and 7-day ESA-lines settled the week slightly higher at 20.46 and 20.49 respectively. 

The daily MI concluded the week positive and ended higher in the negative territory at 98.16 points.  

Based on the MI reading, the market’s immediate trend is still negative.  

COCOA 

COCOA futures prices on the Coffee, Sugar & Cocoa Exchange (CSCE) in New York rallied on renewed technical and speculative buying triggered by news of fresh outbreak of fighting and supply interruption from the Ivory Coast.  

The trade and commercial players bought aggressively on fears of possible anarchy and shortage of supplies if the French military contingent pulls out of Ivory Coast.  

The May 2003 cocoa prices jumped from the week's lows of US$2,111 to US$2,320 and finished the week sharply higher at US$2,297, up US$72 per tonne from a week ago.  

Based on chart, the March 2003 cocoa futures prices closed the week bullish and are expected to stay and expand on its bullish course this week.  

An immediate chart-support for this week stands at the US$2,250-US$2,240 levels.  

If the underlying strength of the market is still bullish, these levels are not expected to be breached.  

Chart resistance for this week is seen at the US$2,350-US$2,380 levels.  

A successful push above these levels could spark-off another strong round of technical buying and send the market above the US$2,350 per tonne level. 

The daily technical indicators closed the week bullish and called for a higher trading level this week.  

The daily stochastics turned bullish on Jan 27 and closed Wednesday deep in the bullish extended-move zones.  

The daily oscillator per cent K ended above the oscillator per cent D and settled higher at 93.61 and 84.99% respectively.  

Analysis of the daily stochastics indicates that the market main trend is bullish.  

The 3-day and 7-day exponentially smoothed average price-line (ESA-line) ended Wednesday bullish and indicated that the immediate trend would stay positive.  

The 3-day and 7-day ESA-lines closed the week higher at 2,267 and 2,227 respectively.  

The daily moving-average convergence/divergence (MACD) retained its buy-signal of Jan 23 and indicated that the market’s upward momentum could sustain.  

The daily MACD and trigger-line settled higher in the positive zones at 60.97 and 54.79 points respectively.  

The daily momentum index (MI) ended positive and settled higher at 106.60 points.  

The advances in the MI indicate that the immediate momentum of the market is bullish.  

CASH TIN 

TIN prices on the Kuala Lumpur Tin Market (KLTM) struggled to hold on to recent gains and congested at lower levels for most of the sessions last week before closing the week in the minus column.  

Trade participation was reduced as traders closed books ahead of the long Chinese Lunar New Year extended holidays. 

The cash tin prices finished the week moderately lower at US$4,502 per tonne, off US$23 per tonne from a week ago.  

Trades for the week ranged from US$4,502 to US$4,446 per tonne.  

Total volume for the week declined to 192 tonnes from 224 tonnes a week ago. 

Based on chart, the cash tin prices ended the week neutral and indicated that trading would remain subdued in the coming three-day trading week.  

Chart-support for this week adjusted slightly lower to the US$4,470-US$4,430 per tonne level. Breaking of this immediate chart-support would signal that a bearish wave has started.  

Chart-resistance for this week stands at the US$4,520-US$4,550 levels.  

The weekly technical indicators ended the week slightly positive and points to further sideways trading this week. 

The weekly stochastics ended the week with its buy-signal intact and closed with a strong bearish convergence.  

The weekly oscillator per cent K and D finished higher at 88.29% and 84.27%.  

Analysis of the weekly stochastics indicates that the market could move into a downward correction.  

The weekly moving-average convergence/divergence (MACD) remains positive for the near-term trend.  

The MACD and the trigger-line closed the week fractionally higher in the positive territory at 0.08 and 0.06 of a point respectively.  

The 3-week and 7-week exponentially smoothed average price-lines (ESA-lines) continue to show that the immediate trend is positive.  

The 3-week and 7-week ESA-lines ended the week higher at 4,477 and 4,405 respectively.  

The weekly momentum index settled above the 100-point mark and ended slightly higher at 107.30 points.  

Analysis of the weekly MI shows that the market’s immediate momentum is still positive. 

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