Crude palm oil Sept 08 futures contract made a low of 3,439 before rebounding back and closed at 3,515 points. Although there is some nice profits from there but we are looking for mid-term trend for sizing our positions to capture the next big wave for CPO. Now where are we in the map of FCPO? Well, Fibonacci and trend analysis tell us a lot about the recent move of this commodity. Now, let us see and hear what story that the chart is telling us now.
My previous bearish call for FCPO does provide some nice profit but was short-lived when CPO rebounded yesterday. Questions looming as to which direction does this CPO want to head into? Therefore, I have updated the chart to provide more visual information as to the recent behaviour of this commodity. As clearly indicated in the daily chart above, there is another support line that parallel to the original dark blue line. As we can see that the FCPO rebounded and closed right above the lower light blue support line in the early Dec 2007 and the beginning of April 2008. This again happened on the 8th and 9th of July this week. That made the lower light blue support line strong and we can expect to see some nasty bear move only if that line is taken out. Right now, FCPO closed above the lower support line but still below the upper dark blue resistance line. That means we have to wait for the next trading signal to confirm the direction for FCPO. Don’t guess. Just act on the trading signal. Want more surprises? Well, Mr. Fibonacci tells us a lot and even forecasted correctly the low 3,439 as the potential rebound line. Now, let us move on to the FCPO hourly chart updated till yesterday 9th July closing price.
As we can see in the intraday hourly chart above, the low of 3,439 coincide with the Fibonacci retracement level. That is the reason why I love Mr. Fibonacci. We can see clearly that many times congestion happened at 23.6%, 38.2%, 50% and 61.8% Fibonacci retracement levels. That makes these support and resistance lines valid and strong. Even yesterday high was right on the 38.2% Fibonacci level which is 3,518 points. Is it just a coincident? I don’t think so. Well, I am using multiple time frames in analyzing the financial markets because whatever happens on the minutes also reflected on the hourly, daily and the weekly chart too and so far this is a profitable habit. Things just don’t happen in a vacuum.
Ok. Let’s get back to the answer for the next CPO big movement opportunity. As we can see that the rising wedge chart pattern is getting narrower which means that the corrective move is nearing the end and also the testing of the lower support line shows some weakness already. Now we need to wait and see if the FCPO closes above the dark blue resistance line. If it does, then we can look to long on the FCPO. Watch out for the golden shorting zone that I highlighted in the chart. Look for shorting there as it can be very profitable. Well, if the FCPO closes below the lower light blue support line, then go short because the downtrend move will be nasty for crude palm oil commodity. Watch closely. If you have opinion, please do share with me.
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