On the August 19th, crude palm oil futures (FCPO) made a low of RM 2351 which is quite close to my target of RM2300 – 2330. Looking at the chart again, I saw why the FCPO bounced from the low of 2351. In just a few days, the FCPO Nov contract made its high at RM 2753 on the August 22nd before reaching the low of RM 2406 on the August 26th. Crude oil has been edging up and this has been lifting the crude palm oil too. How do the defaults from China and India crude palm oil importers affect the price? Let us see explore further to see if there is a short opportunity in FCPO and what are our risks?
As we can see from the hourly chart for crude palm oil futures, FCPO is forming a rising wedge chart pattern which might find its peak around RM 2550 to RM 2560 according to Fibonacci analysis. This could be an opportunity for us to initiate short position around the top of the wedge. This will be a little bit risky to pick the top and I don’t encourage you to do it that way if you have limited trading capital. However if you do have large trading capital, it will be good to initiate some short position at the top relative to your capital. Once the rising wedge chart pattern has been broken, then add more short position. When the breakdown got another confirmation, you might want to might even lesser short contracts to your portfolio. The downside is not so strong as compared to the previous short recommendation by me around RM 3500 to RM 3700 price level. So in terms of money management, please limit your exposure to the crude palm oil short position. Look to long back around RM 2300 to RM 2330. Please be reminded that hourly chart are not as strong as daily chart or even weekly chart, so this trading ideas might be suitable for a few days swing trade.
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Wrong decision to pull short trigger. Cut loss at RM 2567. You see, we should always learn from our mistakes and not to pull the trigger until the market present to us the trading signal. Happy learning from mistakes.
My twitter post call to short FCPO Nov contract at RM 2550 and RM 2505 was right to the top. Today FCPO opened lower at 2430. Look to the resistance level of RM 2455 to add short.