Dear Friends & Associates,
It has been a while since we gave you an update on our Palm Oil Price Outlook and I hope you have performed well after the POC 2012 and traded effectively during the course of the upward trend.
As mentioned earlier, we shall not write for the sake of writing and we would only do so if “there is something to write home about”.
Market performances over the three sessions have given us the reason for this update.
The Indonesian & Malaysian crude palm oil futures prices finally lost it bullish momentum after a near two-and-a-half month bullish-rally. The BMD crude palm oil futures prices peaked at RM3,628 on April 10th and then dipped to a correctional-low of RM3,458 on April 16th.
The GMT2/5 trend-tracker issued the sell-signal on April 12th and that was followed by an increase in the negative momentum accompanied by sharp increases in the daily volume and open-interest.
From the rally-peak, the daily volume of the most active July futures surged from 5,824 contracts to a fresh daily volume-high 17,163 contracts on 17th April.
Open-interest, which is the size of a futures contract, experienced the same phenomena rising from 19,691 contracts on April 10th to a contract -high of 31,108 contracts on 17th April.
What exactly is the price, volume & open-interest telling us about the condition of the market now?
Remember, at the MTT, we spoke about volume precedes price movements.
Softening prices after a prolonged upward rally coupled with significant increases in daily volume accompanied by sharp advances in daily open-interest suggests that the money-flow of the current market is negative.
BMD CRUDE PALM OIL FUTURES-DAILY-GMT2/5 SIGNALS
Fresh selling pressure from sell hedge, speculative selling, rollovers coupled by long-liquidation activities has taken some bullish steam out of the market recently and should this scenario persist, we are likely to see further down-side price erosion in days to come.
Immediate-term support for the BMD July futures now stands at the RM3,450. A successful break below this level could ignite fresh selling pressure and take prices lower to re-test its late-March lows around the RM3,350-RM3,325 levels.
In the event that the market enters into a technical rebound from current levels, the July futures is likely to face with a strong technical hurdle around the RM3,350-RM3,375 levels. Failure to successfully punch above this resistance would signal that the underlying strength of the market is not solid. (see chart).
At this juncture, the bearish traders appear to be the aggressors.
However, a word of technical-caution: if the technical resistance barrier is vaulted aggressively, the market could he headed for a re-test of its most-recent highs and form a technical double-top. Students of the Palm Oil Master Trader Tutorials (MTT) should be prepared to have stops in place. Just in case it turns out to be a bear-trap!
Indonesian ICDX Crude Palm Oil Futures-Daily GMT2/5 Signals
The Indonesian crude palm oil futures traded at the ICDX hit a rally-high at IR10,825 on April 11th and dipped to a low of IR10,305 on 16th April.
The trend indicator GMT2/5 triggered the sell-signal and trend-reversal signal on 12th April and stayed in negative divergence as at today’s close and called for downside momentum to persist.
The ICDX July crude palm oil futures immediate technical support is now seen at the IR10,200-RM10,100 levels. The immediate-term market is expected to drift lower to test these supports in the coming sessions.
Immediate overhead resistance is now pegged at the IR10,550-RM10,650 levels. Failure to successfully break above these levels in the event of a technical bounce would indicate that the underlying strength of the market is still negative.
The Indonesian & Malaysian Palm Oil Master Trader Tutorials (MTT) held in February and March 2012 was a success. Thank-you, really appreciate your participation and valuable support.
Please tell your friends in the palm industry about the MTT. Past graduates who wish to attend the next MTT in Indonesia & Malaysia for free can obtain details at www.palmoil-mtt.com
The upcoming Palm Oil Master Trader Tutorials (MTT) would be held in Kuala Lumpur on 6 & 7 July 2012 and in Medan on 13 & 14 July 2012.
For registration and details kindly go to www.palmoil-mtt.com/register-now
May The Good Force Be With You Always!