15th December, 2011
PALM OIL ANALYSIS & PRICE OUTLOOK REPORT
Dear Friends & Associates,
The Short-Term Trend to Remain Mildly Negative. Market Has Entered Into The Third-Leg Of The Elliot-Wave Correctional-Move.
The trend-tracker (exponentially-smoothed averages) now officially known as GMT2&5, triggered the sell-signal on the 9th, December and confirmed the end of the upward-leg (wave-b). This was followed by some aggressive fresh selling pressure coupled by long-liquidation, driving price below the RM3,000 level on numerous occasions last week.
Light buying supported was seen throughout last week around the RM2,980-RM3,000 levels, partly boosted by short-covering linked to profit-taking and partly by speculative and commercial buying.
As at the close of last week’s trading, (16th Dec), the GMT2&5 lines remained in mild negative divergence and signalled that the newly developed downward momentum could persist for a little while despite the slight rebound from its most recent decline-lows.
As a trend trader, I would like to assume that the latest downward wave(c-wave) is not completed until the GMT2&5 revert back to its positive mode by giving the buy-signal. (please see BMD CPO chart).
Meanwhile, the Elliot-Wave correctional wave-count clearly indicates that the market is in the 3rd and final correctional wave (c-wave) of the Elliot-Wave 3-waves (a-b-c) correctional-move count. The “b-wave” or upward-leg peaked at RM3,133 on 5th, December and the price weakness that followed took prices below the “a-wave” lows of RM3,011 established on 30th, November.
What does all these things means to us as a trader? Yes, it simply means that the technical correction or adjustment to the bull-run is nearing completion and the market is expected to enter into a new trading phase soon.
From a technical perspective, we may see some range-trading or price congestion around the RM2,970 to RM3,050 levels for sometime before the market takes on a fresh trend.
The ICDX CPO February futures prices turned negative some seven trading days ago with the triggering of the GMT2&5 trading signal. This bearish signal brought on renewed commercial selling from producers and pressured prices below it most recent-low levels last seen on the 29th of November.
As at Friday’s close, the ICDX’s CPO futures market trend remained in negative mode and signaled that the downward move is not completed.
The Elliot-wave count signaled that the market has completed its second wave or “b-wave” of the three-wave correction and is now in the third and final phase or “c-wave” of the three-wave correctional move.(see ICDX chart).
As at Friday’s close, the technical indicators failed to provide any solid evidence to confirm the conclusion of the c-wave. In any case, trading over the next few session could see prices of the February futures hovering around the IR8,600-IR8,800 levels before the market can fully settle in and see fresh direction.
The trend-tracker GMT2&5 stayed bearish on Friday’s close, remaining in bearish divergence and failed to confirm that the downward trend has ended. Please see ICDX chart.
And finally, please feel free to share this Palm Oil Trend Analysis and Price Outlook Report with your friends in the Palm Oil industry.
Thanking you in anticipation.
(Chief Coach-Palm Oil Master Trader Tutorials)