Yesterday we saw crude palm oil futures contract breakdown from rising wedge chart pattern in the intraday hourly chart and present to us a good trading opportunity. With yesterday closing price for CPO, we are seeing a breakdown trading signal triggered in the daily chart. Does the FCPO ready to continue its downtrend from here onwards? We still need to have confirmation before we jump in and today’s opening will be a good sign. Could this be an opportunity for us to make some money?
We have a trade setup forming as the rising wedge chart pattern continues to unveil itself. The question that we should ask is whether this bearish chart pattern has completed its course or not. From the chart, we are seeing that there is more room for sideway consolidation movement. However, trading signal is trading signal. We act based on trading signal that have been triggered and confirmed. Could the market rebound from the low of the day and resume its upwards just like before? In short, yes it could. That is what we called bear trap. The best way to find out is to put some money in and establish the short position entry point around 3,470 - 3,500 and cut loss if FCPO closes above 3,520. I will only consider the validity of the signal based on end of day data only since market fluctuation for CPO can be very huge.
In summary, my call is to establish short position for FCPO Sept contracts at the opening price range and to keep short only if the FCPO is below 3520. We must give time to the market to do what it needed to do. Once we have established our position, the next best thing to do is to wait. Inactivity is good until we have confirmation that the trend has reversed or we are wrong in our analysis. Remember the fishing experience?
If this trading signal proves to be a continuation of the bearish trend, then the next best thing to do is to ride on the trend until we see some trend reversal chart pattern forming at the bottom. For now, let your profits run and cut your losses quick. Happy trading!
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July 8th, 2008 at 11:55 am
I am keeping an eye on the FCPO movement. I will either update the latest development or any changes on the post comment or on my twitter account. Below is my twitter URL.
http://twitter.com/tradeorinvest
July 8th, 2008 at 5:20 pm
Up to this moment, FCPO made a low of 3,456 which coincide with the Fibonacci retracement support line for intraday hourly chart at the following levels:-
1) 23.6% @ 3,501
2) 38.2% @ 3,530
3) 50% @ 3,552
4) 61.8% @ 3,574
However, FCPO daily chart up to this moment looks bearish and further downside is expected.