Forecasting Price Trends: A weekly column by G.M. Teoh on Crude Palm Oil, Soyoil, Cocoa and Cash Tin
CRUDE palm oil (CPO) futures prices on Bursa Malaysia Derivatives edged higher on light commercial demand and speculative short-covering prompted by higher exports in August and closed the week with moderate gains. Firmer soyoil futures prices helped provide some underlying support throughout the week.
The November futures prices rebounded from a week's low of RM1,356 to RM1,387 and settled moderately higher at RM1,386, up RM20 a tonne from a week ago.
Volume for the week fell to 15,362 from 17,391 contracts a week ago. The daily candlestick chart closed the week positive and indicated the newly developed upward cycle would continue. There were four white candles last week and the gradual upward pattern shows the positive trend would continue.
Chart support for this week is revised higher to the RM1,380–RM1,370 levels. The overall trend would remain positive if these levels are not successfully breached. The immediate-term chart resistance is seen higher at the RM1,390–RM1,395 levels.
The daily technical indicators turned positive at Friday’s close and signalled the market’s immediate momentum was bullish.
The daily stochastic triggered the short-term buy signal on Aug 29 and closed the week constructive.
The oscillators per cent K and D finished the week higher at 67.70% and 47.11% respectively. Based on the daily stochastic the market is not overbought following the recent upward move.
The daily MACD triggered the buy signal on Sept 1 and managed to stay positive at Friday’s close. The MACD and the trigger-line closed the week higher in the negative territory at minus 1.53 and minus 2.11 points respectively.
The exponentially smoothed moving-average price lines (ESA-lines) triggered the short-term buy signal on Sept 1 and remained positive on Friday. The 3- and 7-day ESA-lines ended the week higher at 1,379 and 1,376 points respectively and signalled the immediate-term cycle would remain bullish.
The 9-day Relative Strength Index (RSI) advanced from a week's low of 43.63 points on Aug 29 and ended higher in the positive territory at 58.94. Analysis of the daily RSI indicates the immediate-term underlying strength of the market is positive.
SOYOIL futures prices on the Chicago Board of Trade rose in early trading last week and turned choppy for the rest of the sessions as traders reacted to concerns over the future of US exports following the closure of the Gulf Coast in the wake of Hurricane Katrina.
About 70% of US grains and soybeans are exported through the Gulf Coast. Export terminals there were closed for four days awaiting power to be restored after the hurricane devastated the area.
The December soyoil futures prices jumped from a week's low of 22.21 to 23.60 US cents and settled Thursday higher at 23.30 US cents, up 0.92 US cent per pound from a week ago.
The daily candlestick chart closed the week neutral to slightly positive and signalled the market would remain in wide range trading in the near term.
Chart support for the immediate term is seen higher at the 23.15–22.90 US cents levels. The overall chart outlook would turn slightly negative if these levels are breached. Chart resistance for this week is raised to 23.45–23.60 US cents.
The daily technical indicators closed the week mostly positive and indicated the main trend would stay firm this week.
The daily stochastic triggered the short-term buy signal on Aug 29 and closed the week positive for the immediate-term trend. The oscillators per cent K and D settled higher at 66.42% and 59.99% respectively and indicated the upward breakout would sustain.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) turned bullish on Aug 29 and held on to its positive divergence at Thursday’s close. The 3- and 7-day ESA-lines settled higher at 23.07 and 22.90 points respectively.
The daily MACD turned constructive last week and signalled the immediate-term cycle was in a positive phase. The MACD and trigger-line closed the week higher in the negative zones at minus 0.428 and minus 0.33 point respectively.
The 9-day RSI redounded from a week's low 40.53 points on Aug 29 and closed sharply higher in the positive zone at 55.97. Analysis of the RSI indicates the immediate underlying strength is positive.
COCOA futures prices on the New York Board of Trade started the week in a lacklustre fashion and rebounded strongly in late trading to close Thursday with huge gains. Prices soared to a four-week high supported by fund buying amid a weakening US dollar and bullish technical signal on the daily price chart.
The US dollar's weakness against the pound sterling provided the bullish impetus throughout the week.
Buy stops were triggered as the market advanced, forcing many that had held short positions earlier to buy back.
The December cocoa futures prices surged from a week's low of US$1,391 to US$1,496 a tonne and settled Thursday sharply higher at US$1,496, up US$68 per tonne from previously.
The daily candlestick chart closed the week bullish and indicated the market was in an upward breakout.
Chart support for this week is seen higher at the US$1,480–US$1,470 levels. The overall chart outlook would stay bullish if these levels are not violated this week. Chart resistance is adjusted higher to US$1,510–US$1,530.
The daily oscillators closed the week bullish and pointed to more upward trading this week.
The daily stochastic gave the short-term buy signal on Sept 1 and called for more bullish performance this week. The daily oscillators per cent K and D ended the week sharply higher at 64.25% and 54.15% respectively.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) turned bullish on Aug 31 and remained positive for the short-term trend. The 3- and 7-day ESA-lines finished higher at 1,452 and 1,431 points respectively.
The daily moving-average convergence/divergence (MACD) retained its bullish signal at Thursday’s close and signalled the market was in a bullish phase. The MACD and trigger-line settled the week higher at 0.78 and minus 2.93 points respectively.
The 9-day Relative Strength Index (RSI) closed the week sharply higher in the overbought zones at 72.48 points. Analysis of the daily RSI indicates the immediate underlying strength of the market is still positive.
TIN prices on the Kuala Lumpur Tin Market trended sideways in thin trading and closed the week with slight gains. Small demand from Japanese buyers helped support the market in late trading last week.
Tin prices on the KLTM trended narrowly from a week's high of US$7,040 to US$7,010 and closed slightly higher at US$7,040, up US$10 a tonne from previously. Volume for the week declined to 382 from 475 tonnes a week ago.
The candlestick chart closed negative for the immediate-term trend and indicated the market would stay sideways to lower this week.
Chart support for the immediate-term is adjusted lower from a week ago to the US$7,020–US$6,980 levels. Chart resistance for this week is seen lower at US$7,060–US$7,080.
The weekly oscillators ended mixed and signalled further weakness this week.
The weekly stochastic retained its sell signal on Friday and indicated further bearish momentum this week. The oscillators percent K and D closed lower at 26.64% and 34.97% respectively.
The weekly moving-average convergence/divergence (MACD) indicates the market is not completely out of its constructive phase. The MACD and trigger-line closed at minus 0.2958 and minus 0.2980 point respectively.
The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) expanded on their bearish divergence last week and signalled the near-term trend was still negative. The 3- and 7-week ESA-lines finished lower at 7,046 and 7,106 points respectively.
The 9-week Relative Strength Index (RSI) moved out of the oversold territory and ended higher at 30.51 points. Analysis of the weekly RSI shows the market’s immediate underlying strength is slightly positive.