CRUDE PALM OIL
CRUDE palm oil (CPO) futures prices on Bursa Malaysia Derivatives fell from their historic peak set in the early part of the week and ended moderately higher after volatile trading.
Earlier, bullish traders took advantage of the weaker export numbers and weakness in crude oil price to lock in their windfall profits.
The sharply lower Malaysian palm oil exports for the first 15 days of January exerted some bearish influence on trading and encouraged long liquidation.
The Societe Generale de Surveillance (SGS) estimated palm oil exports for Jan 1–15 lower by 38.3% to 461,598 tonnes from 747,834 tonnes in the equivalent period in December.
The April futures prices plunged from a record high of RM3,420 and hit a week's low of RM3,262. The price then made a mild rebound before closing the week higher at RM3,316, up RM36 a tonne from the week before.
Volume for the week jumped to 95,732 from 84,609 contracts a week earlier.
Open interests at Thursday’s close increased moderately to 41,303 from 40,830 contracts previously.
The candlestick chart closed the week negative. A spinning-top was formed on Friday. A spinning-top is a candle with a small real body and during a rally or historic highs, spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
The CPO trend will continue to be determined by the direction of the crude oil and soyoil prices this week. If the crude oil drops below US$90 a barrel, we would see further long liquidation in CPO prices.
The short-term chart support for the April futures is now seen at the RM3,280–RM3,250 levels. Violation of this important chart support would generate strong selling pressure.
Chart resistance for this week stands at RM3,330–RM3,360.
Most of the daily technical indicators settled the week bearish and suggested the market would continue with its wide trading swings and would continue with its downward bias this week.
The daily stochastic triggered the sell signal on Jan 15 and ended the week bearish for the immediate-term trend. The oscillators per cent K and D settled sharply lower at 49.60% and 61.46% respectively.
The main trend-tracker, the 3- and 7-day exponentially smoothed moving-average price lines (ESA lines), closed neutral to slightly positive and signalled the market was heading for a downward cycle.
The 5-day Relative Strength Index (RSI) plunged last week and ended near the neutral territory at 57.37 points. The RSI is indicating the immediate underlying strength of the market is weak.
Soyoil futures prices on the Chicago Board of Trade scaled new historic highs in sympathy with record soybean and corn prices, but reversed direction in late trading before closing the week with moderate gains.
Sharp sell-off in commodities triggered by recession fears further dampened sentiment.
The March futures prices fell from a historic high of 54.32 US cents and made a week's low of 51.86 US cents. Prices then rebounded to close the week slightly higher at 53.14, up 0.48 US cent a pound from a week earlier.
The daily candlestick chart remained negative at Thursday’s close and called for more downward selling pressure this week. The formation of a black candle with a long upper shadow on Friday shows the market has lost its upward momentum.
Chart support for the March futures is now pegged at the 52.80–52.60 US cent levels. A downward cycle is likely to form if these support levels are violated this week. Chart resistance for this week is adjusted slightly higher to 53.35–53.50 US cents.
The daily technical indicators ended the week mixed and suggested the newly developed bearish pressure would continue.
The daily stochastic triggered the sell signal on Jan 15 and managed to stay bearish at Friday’s close. The oscillators per cent K and D closed sharply lower at 62.31% and 69.49% respectively.
The trend tracker, the 3- and 7-day ESA lines, remained in bullish divergence and indicated the market was not out of its bullish phase.
The 5-day RSI ended lower and closed at 75.77 points. The daily RSI is indicating the underlying strength of the market is weak.
ICE Futures US cocoa futures prices rallied to a lifetime high on fund and technical buying early last week and then entered into a strong technical correction on fund and speculative selling before closing Thursday with small gains.
The trading volume was thin and volatile as traders attempted to exit on the long side as the market failed to generate strong follow-through buying after hitting fresh contract highs.
The March cocoa futures prices fell from a week's high of US$2,232 to US$2,133 and ended slightly higher at US$2,171, up US$9 a tonne from the week before.
The daily candlestick chart ended the week bearish and called for more downward trading this week. There were three black candles in the past three days and the formation of a black candle with a long upper shadow on Thursday shows the immediate-term momentum is bearish.
Last week’s upward breakout from the triple-top resistance levels shows the main trend is technically very bullish.
Chart support for this week is seen at the US$2,155–US$2,140 levels. A downward cycle would start if these support levels are violated this week. Chart resistance is pegged at US$2,190–US$2,210.
The weekly indicators ended mixed and indicated the market had lost its bullish momentum.
The daily stochastic gave the sell signal early last week and remained negative at Thursday’s close. The oscillators per cent K and D finished sharply lower at 36.64% and 49.43% respectively and suggested the bearish cycle would persist.
The 3- and 7-day ESA lines remained in bullish divergence and showed the main trend was still constructive.
The 5-day RSI fell to 60.12 points and signalled the market’s immediate underlying strength was negative.
Tin prices on the Kuala Lumpur Tin Market (KLTM) trended lower last week in line with the sell-off in commodities and weaker tin prices on the London Metal Exchange.
The KLTM tin prices traded downward from US$16,260 to US$16,100 and closed the week sharply lower at US$16,100, off US$200 a tonne from the week before.
Volume for the week jumped to 422 from 356 tonnes a week earlier.
The weekly candlestick chart finished bearish and signalled more downward trading this week. The formation of a black candle and violation of the three-week support base on Friday showed the main trend had turned bearish.
Chart support for this week is lowered to the US$16,000–US$15,950 levels. Chart resistance is seen at US$16,150–US$16,200.
The weekly technical indicators closed mostly negative and indicated the bearish momentum would continue this week.
The weekly stochastic buy signal stayed positive at Friday’s close, indicating the market was still in a positive phase. The oscillators per cent K and D ended lower at 40.92% and 35.33% respectively.
The 3- and 7-week ESA lines ended in negative divergence and indicated the main trend was out of the bullish phase.
The 5-week RSI settled lower at 41.02 points and indicated the market’s immediate underlying strength was bearish.
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