On June 25th, FCPO touched the low of 3,492 points before rebound from the support line drawn from the bearish chart pattern of rising wedge. That amazed me again and again to see how technical analysis is useful and have been a reliable tool to make money from the financial markets. Today we will explore the FCPO to see if there is any short term profitable trade setup for us to make some good money. In this post, I will cover two different time frames for analyzing futures contract for crude palm oil. Bear in mind there are always different market trends that exist at the same moment of time.
In my previous post, it seems that FCPO has not completed its bearish chart pattern of rising wedge and it faithfully rebounded from the support line on that day itself. Amazing isn’t it? There was no breakdown from there. Well, we have to incorporate confirmation in trading setup to ensure we are right on track in the first place. From the above chart on Friday, it seems like it is going north as the uptrend continues from the previous rebound on the June 25th. I would strongly recommend shorting the FCPO as it reaches the top resistance line. Only initiate short position after we are getting the confirmation of trend reversal signal at the reversal zone highlighted in the chart above. That can be quite a while from here. For now, let us look at the potential short term trade setup using hourly chart below.
From the chart above we are seeing a rising wedge bearish chart pattern forming in the hourly intraday chart for FCPO. At the close of trading week on 4th July, FCPO rest right near the bottom of the intraday rising wedge. This might present to us a possible short term money making opportunity by shorting FCPO when it breaks 3,618 points. Remember that this is only for very short term trading purposes as the daily chart still have uptrend potential and this is very dangerous if we are keeping the short for overnight. The only safe place for us to short crude palm oil for longer term is at the top of the trend reversal zone marked in the daily chart above or when the FCPO break the lower support line of the rising wedge with confirmation of trend continuation. Too bad, I am not able update this post last weekend or early this morning before the CPO market open and therefore I will also include the FCPO performance up to the morning session.
From today intraday chart, FCPO did opened lower below the 3,618 level and proceeded south before closing at 3,558 for the morning session. It closed right below the 50% Fibonacci retracement level and also horizontal support line at 3,569 points. We wouldn’t be able to tell from the hourly chart right now whether this is just a correction of the intermediate uptrend or it is a new intermediate bearish move. However the overall primary trend outlook for FCPO is bearish with its rising wedge chart pattern near its completion soon before the breakdown for bearish trend continuation.
Well, if we miss this one, there is always another one for us. Always remember one of the most important rules of the financial market trading philosophy that the market is always there for us. Don’t rush and chase the market. Wait patiently for the market to throw the money to you.
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July 7th, 2008 at 6:10 pm
Wow!! That’s the power of technical analysis. Breakdown from the rising wedge today yields great return for intraday short. If you short at the open of the crude palm oil (CPO) market @ 3,595 points and close at the end of day @ 3,512 points, you would make 83 points which is equivalent to RM 2,075 per contract. Based on the margin requirement of RM 8,000 per contract, that would translate to 25.9% return in a day. That’s the trade setup for intraday trading.
July 8th, 2008 at 3:13 pm
It looks like this breakdown is not a correction to the previous short rally but instead a new downtrend move.