Last week we had some good opportunity to make money by shorting FCPO Sept and Oct contracts when it triggered the sell signal after breaching the 3,518 critical levels on the intraday hourly chart. It was one of the confirmations based on Elliot Wave Theory that the previous rally was just a corrective wave. Last week, bearish breakdown signal was also triggered on the daily chart. As of last Friday closing price, FCPO rally to close near the opening price after gapped down on the opening. Let us look what holds for us in this coming week for FCPO.
From the chart we can see few major clues. Let us review each of them.
- On the 15th July, the CPO rally up to 3,560 points after breaching the 3,518 critical levels the day before. That rally was right on the 61.8% Fibonacci retracement level. Here we see again the works of Fibonacci in financial market. However, with the 3,518 critical breached, we could confirm thru Elliot Wave Theory that the rally which begun from 9th July was just a corrective wave and further downside move will be expected.
- On the 17th July, FCPO daily price closed below the lower light blue support line and that signaled a bearish breakdown. With that support taken out, we could expect much downside move from here. This correlate with the bearish rising wedge in chart pattern analysis and the rising triangle which is also basically an Elliot corrective wave.
- Last Friday on the 18th July, FCPO closed at 3,392 points and formed a hanging man in the Japanese candlestick pattern. Although the hanging man does not proves anything by itself, but we have to pay careful attention to this one as it carries some weight with the high volume as indicated in the daily price chart above. In volume analysis, a hanging man candlestick pattern with high volume might signify short term trend reversal. However as in any chart interpretation, confirmation is always needed as a margin of safety. Without confirmation, there is no validity to the trading signal.
In summary to our chart analysis above, the market outlook for crude palm oil futures contract is bearish as indicated in point #1 and point #2. However, we could be expecting a rebound to the 3,500 level as indicated in point #3. All these are the possibilities. Never take the gambling risk. Wait for confirmation. My personal view on this is to add short in FCPO Oct contracts at the 3,500 level. At this present moment, it is not wise to add short. Let see tomorrow what does the high volume on last Friday means. If the high volume comes from strong buyers, then we could expect a rebound.
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July 21st, 2008 at 11:55 am
Nice bear move. FCPO downed by more than 200 points during the morning session. However, please do take note, around 3,200 points +/-, there is a Fibonacci support level with 50% @ 3,400 and 61.8% @ 3,440. These Fibonacci support level might and might not hold since it is based on the intraday hourly chart. Remember that FCPO daily chart will have more significance and we are expecting more downside move with some corrective rally up along the way.
July 23rd, 2008 at 1:28 pm
FCPO Oct contract downed by 190 points for today morning session to close at 3,062 points. Bearish trend continues with more downside potential. Don’t ever try to pick the bottom now cause it will be like catching a falling knife. Wait for the market to show us what it wants to do. Keep short and make money.
July 28th, 2008 at 6:22 pm
Today CPO futures Oct contract downed by 69 points to close at 3,001. This new low confirmed that the last few days rally (corrective wave as defined by Elliot Wave) was over and we could expect heavy selling tomorrow.