Price rebound off recent low is still in progress while its longer term outlook is now neutral to up. The recent selling is over for now as price managed to make a higher high last week (chart 1) and closing above the 3600 resistance level.
The closing of 3600 is significant as it nullify the brearish bias of the gapdown created 2 weeks back. Therefore, closes above that level will give an upward bias to the longer term trend. Similarly, there are still plenty of upward biases evident:
1) Two weekly hammers suggest price bottomed above 3300 (chart 3);
2)The up trendline that connects July and Oct low is still intact (chart 2);
3) Moving average still points up on weekly basis (chart 3);
4) Ringgit has yet to show signs of weakness; and
5) RSI is the lowest in the past 8 mth, which could mean price is oversold.
Nonetheless, the breakaway gap of 3800 is yet to be closed and if indeed price is strong, it has to close the gap to erase all traces of brearishness and the first step is a close above 3700. Beanoil too is again testing recent high and break above should provide good confirmation. Similar move should also be seen in the grain complex. Note however that beanoil is leading the rebound at the moment. Otherwise, a price below 3600 may see sellers returning.
Another thing, CPO is rebounding with weaker momentum in the past week, making marginal high along the way, thus creating a wedge like pattern (chart 1). It is usually a contiuation pattern, meaning a return in selling in this case, but never guaranteed. Look for price to trend on direction of break on successful violation.
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