FCPO LongCalculate your risk for Long position. Price at support trendline but consider other factors.
CPO1! trade ideas
Week 40: Compression is coming on FCPOX 2020Week 40: 28 September to 02 October 2020
FCPOX 2020 analysis
At the moment the price is in the consolidation zone, to make it simple to the naked eye, the price is forming the Right Shoulder.
However, please note that there are many variations of the "right shoulder", it can be a straight horizontal channel, diagonal channel, flag, wedge, and ascending triangle.
Therefore, there are many variations that we can play with the market. As this is a weekly analysis, I will choose the smallest risk with a much favourable risk rewards ratio.
Here is my personal trade:
Sell Limit at RM2,978
Stop Loss at RM3,027
Take Profit at RM2,695
Risk Rewards Ratio = 5.9R
Disclaimer :
The analysis above for educational purposes only, I do not responsible for your losses. Please adjust your own lot-sizing according to your appetite.
If you are benefiting from my trade opinion, please buy me coffee.
As always, move your SL when you are in the profit zone.
FCPO TRADING : 183) short on reboundthis is haidojo and the number is 183...
analysis maintains "short on rebound"...
that is nothing much to comment except that the market fcpo-dec is sliding down slowly...
lower-high is formed...unless the price challenges 2900 and maintains abv it, then we might be looking at a possible reversal...
higher resistance : 2900
immediate resistance : 2800
temporary support : 2730
psychological support : 2700
WARNING!
RISK DISCLAIMER : this is juz a trading idea...trading stocks, futures or forex might incur a huge risk to your account/funds… DON’T LOSE MONEY THAT YOU CANNOT AFFORD …any idea(s) of trading in this episode SHALL NOT be regarded as a hint of BUYING or SELLING . It is MERELY a trading journal and it has been used for educational purpose only… trade at your own risk!
**your "LIKE" and "FOLLOW" are my main source of motivation to continue posting more valuable contents...TQ**
Oct01 - CPO (Hourly) - Potential test 26xx if 2700 Fails...We're dealing with a MAJOR SIDEWAYS situation here, seeing the steep Up & Down swings & abrupt reversals between 2.6,2.8k --- 3.0,3.1k.
2.6-2.8k is KEY SUPPORT area on Weekly, price likely to consolidate within this zone, before deciding its next major direction.
Long-term view, currently favoring UP, as long as S2 holds.
Happy Hunting! 🥂🚀
-jk-
FCPO TRADING : 182) bat pattern invalidthis is haidojo and the number is 182...
so the price has fallen below the A-leg of bearish bat pattern...it becomes invalid...
so short on rebound...
higher resistance : 2900
immediate resistance : 2800
psychological level : 2700
lower support : 2600
WARNING!
RISK DISCLAIMER : this is juz a trading idea...trading stocks, futures or forex might incur a huge risk to your account/funds… DON’T LOSE MONEY THAT YOU CANNOT AFFORD …any idea(s) of trading in this episode SHALL NOT be regarded as a hint of BUYING or SELLING . It is MERELY a trading journal and it has been used for educational purpose only… trade at your own risk!
**your "LIKE" and "FOLLOW" are my main source of motivation to continue posting more valuable contents...TQ**
HEAD AND SHOULDER + RSI below 50, bear is taking charge soon?fcpo is trying to surpass above RSI 50 but failed to do so. very high possibility that the uptrend ends.
Also, HEAD AND SHOULDER could be formed after the price break the neckline (at around 2774)..
so is the bear taking charge soon?
FCPO TRADING : 181) bearish bat patternthis is haidojo and the number is 181...
"bearish bat pattern - short at 2947, SL 2983, 1st tp 2900, 2nd tp 2800..."
things don't seem good on our bearish bat pattern...price continues to slide lower...so the strategy is : "short on rebound"...
higher resistance : 2900
immediate resistance : 2800
psychological level : 2700
lower support : 2600
WARNING!
RISK DISCLAIMER : this is juz a trading idea...trading stocks, futures or forex might incur a huge risk to your account/funds… DON’T LOSE MONEY THAT YOU CANNOT AFFORD… any idea(s) of trading in this episode SHALL NOT be regarded as a hint of BUYING or SELLING . It is MERELY a trading journal and it has been used for educational purpose only… trade at your own risk!
**your "LIKE" and "FOLLOW" are my main source of motivation to continue posting more valuable contents...TQ**
FCPO TRADING : 180) possible bearish bat patternthis is haidojo and the number is 180...
a possible bearish bat pattern is formed today...
short at 2947, SL 2983, 1st tp 2900, 2nd tp 2800...
higher resistance : 2900
immediate resistance : 2800
psychological level : 2700
lower support : 2600
WARNING!
RISK DISCLAIMER : this is juz a trading idea...trading stocks, futures or forex might incur a huge risk to your account/funds… DON’T LOSE MONEY THAT YOU CANNOT AFFORD …any idea(s) of trading in this episode SHALL NOT be regarded as a hint of BUYING or SELLING . It is MERELY a trading journal and it has been used for educational purpose only… trade at your own risk!
**your "LIKE" and "FOLLOW" are my main source of motivation to continue posting more valuable contents...TQ**
FCPO..RSI SUPPORTED..During the last downtrend (Jan- May 20), RSI never surpass above 50 and hence RSI 50 become the resistance.
Similarly, RSI 50 was became the support for the recent bull trend (May 20- current)..
will RSI still continue to support the BULL?
FCPO | Weekend Updates & Analysis – 27 Sept 2020Weekend Market Updates & Analysis 27 Sept 2020
Where we are
1) The market opened higher on the 21st, and started to sell off in the afternoon throughout the whole week, and had a short covering outside up bar on Friday on some short profit taking.
2) When I was writing the last market report, prices was still very bullish and there was no indication of any strong pull back yet.
3) However, I did voice my caution with the following points in my last update. I have stated:
i. That prices for FCPO, SBO and Dalian are all testing their multiyear top of the trading range.
ii. Point 14: FCPO is in the 3rd push up of the wedge which tends to attract profit takers
iii. Point 23: Soybean’s move up is climatic and usually not sustainable
iv. Point 25, 27, 28 : Soybean Oil chart is climactic and tends to attract profit takers at the top of the trading range.
v. Point 32: Dalian Palm Olein is testing the top of the 7 year trading range, and is a wedge which tends to attract profit takers especially if we have a strengthening of the USD vs RMB.
vi. Point 53: A strengthening of the USD against RMB will damper the rally in SB/SBO
vii.Point 56: Usually after a big rally where we have a wedge pattern, and price is at a major resistance areas, we tend to see some profit.
You can read last week’s update in detail here. Weekend Market Updates & Analysis 20 Sept 2020 | CPO, Soybean, Soybean Oil & Some Currencies
My opinion of what caused the pullback
4) Note that USD started to strengthen sharply around 3pm Malaysian time, which is the open of the European market on the 21st of Sept 2020.
5) With that, a lot of markets started to sell off across the board. SBO/BO, Gold/Silver, Corn, Wheat, European Equities, China Equities, Indian Equities, Taiwan Equities, Australian Equities, USA Pre-market Futures, basically most of what instrument that has benefited from a weak dollar and had been rallying prior to that sold off.
6) As for Palm/SBO/SB, I have said that due to the continuous rally for months, there are bulls who have been long since May and are looking for reasons to book their profits.
i.With the strengthening of the Dollar and the global equities and commodities unwinding, it gave bulls a good reason to book their profits and close their position, which caused a strong pullback.
ii. As with most climatic push up that is excessive and sharp, once the selling started, selling begets more selling, and we saw 4 continuous days of selling (Monday to Thursday) and a bounce on Friday.
What’s Next?
Monthly FCPO
7) In my last update, I said that the monthly chart was in a strong bull bar, and was unlikely to turn into a bear bar.
8) However, the unlikely thing has happened and with 3 more trading days to go next week, if the bar close below the middle of the bar or near the lows, it is a bearish bar and a sell entry bar for sellers.
9) So we have to see how the bar closes next week, whether bulls can push price back higher and close above the middle of the bar, or bears can maintain prices below the middle of the bar, and close as low as possible to the low of the month.
Weekly FCPO
10) Price reversed down from the top of the multiyear trading range and closed the week as an outside down bear bar.
11) Price found some support at the lower trend line and reversed some of the down move on Friday so the week has a prominent tail below.
12) The bears would have preferred a strong close at the low of the week. A tail below shows the lack of conviction of the bears. The bear bar is a sell signal bar for next week albeit a weaker one especially near support.
13) With last week being an inside bar to this week’s outside down bar, it is possible that next week we might get another inside bar, which mean price trade in a smaller range but still within this week’s high and lows.
14) We will have to monitor if the bears get a breakout below this week’s low during next’s week price action. Since the previous trend up from the end of April is fairly strong, I suspect we should see more buyers below than sellers after the second attempt to go sideways to lower.
i. Other potential support areas below is at 2800 and at the 20ema on the weekly chart at around 2650-00 area.
Daily FCPO
15) Price reverse down strongly from the top of the trading range, and found support at the bottom of the trend line just below the 20ema.
16) Friday closed as an outside up bull bar, also an inside-outside bar with Thursday’s bear bar, and taken together, Thursday and Friday was a Down-Up reversal at the 4 month’s Trend line.
17) Bull are looking for a continuation of the bull trend following this sharp pullback. Will they get it? It will depend on a few other factors which we will look into throughout this report.
i. The bears on the other hand are looking for a second leg sideways to down after a brief bounce and for price to test around 2650-00 area.
18) This current strong pullback from the bull trend tells us that the bulls are very willing to sell at these 3100-3000 top of the multiyear trading range, and sellers are also looking to sell at these areas.
19) Usually following a strong uptrend, markets prefer to see some type of a double top before we see a proper reversal of the trend. This means that traders will be looking to see if we have a strong re-test of the recent highs of 3100 after some kind of sideways to down second leg test.
i. If we have a strong re-test of the high, traders will then see if we get another breakout to a new high and for the trend to continue.
ii. If we have a weak re-test of the highs, traders will conclude that the trend has likely ended and will be looking to sell some type of double top with the recent highs. Take note that a double top does not need to be exactly at 3100. It can higher, or lower and still be considered a double top.
Some fundamental issues effecting palm
20) i. Production is expected to be lower next month between the range of 3-8%.
ii. Expectation of more rain to hit this region which may cause flooding and may cause harvest disruption.
iii) China will be on holiday for the first 8 days of Oct. I’m still wondering the effect this will have on palm as I cannot say for sure.
iv) Some talk of labor shortage in the plantations.
Monthly Soybean
21) Soybean monthly pulled back near the high of the multiyear trading range. Currently, the bar has a prominent tail above which indicates some profit taking by the bulls and some selling from the bears but still trading slightly above the middle of the bar, which is to the bull’s favor.
22) There are 3 more trading days for Sept, and the bears wants the month to close below the middle of the bar, while the bulls want prices to bounce to close above the middle of the bar, as high as possible.
23) However, even if the bulls get a bounce in the next few days and prices close above the middle of the bar or near the high of the month, price is currently trading near the top of the multiyear trading range, and the bulls have been long since May/June and if price stalls at the top of the trading range, we will likely see more profit taking from the bulls and the bears coming out to sell.
i. We need to monitor this in conjuction with the Dollar’s move also as I will explain more below.
Soybean Weekly
24) Soybean weekly closed as a bear inside bar. This is the first bear bar following a tight 6 bull micro channel which indicated very strong buying prior to this pullback. Take note that the bears was not able to close the weekly bar below the low of last week, which indicated the bears are not as strong as they would have preferred.
26) Because it is a bear bar closing near it’s low, it is a bear signal bar for next week. So bear will likely try to push prices below the low of this week. However, because this is the first bear bar following a tight bull microchannel, we will likely find more buyers than sellers below the bar.
i. I will be monitoring the levels 988 and 940 area as support levels.
Daily Soybean
27) This is the first major pullback for Soybean on the daily chart since the first week of August. It was in a 1.5 months of climactic bull parabolic wedge test of the top of the multiyear trading range and prices is currently pulling back to its 20ema around 990.
28) Because the upmove was so strong, we should expect traders to buy this pullback once it is over. Support areas that I am looking at is around 988 and 940 area.
i. Take note that the bears are looking for a second leg down from here after a brief bounce, and will likely get it next week.
29) Usually for trend to reverse, it has to have some kind of major trend reversal pattern, meaning prices would have to have some kind of re-rest of the highs and make some type of double top. So traders will be looking at the strength of the re-test of the highs after this pullback is over.
30) If the re-test of the highs is strong, bulls want prices to breakout of the top of the multi year trading range. However, we also have to look at how the USD is trading in relation to SB. If the Dollar continues to strengthen, then price may stall again and turn down lower. If instead we see the Dollar turn down lower, then it will be supportive for SB prices and traders will look to see if price can break above the top of the multi year trading range.
Monthly Soybean Oil
31) Monthly SBO turned down lower near the high of the multiyear trading range. The monthly bar currently is a doji bar. With 3 trading days left in the month, the bears wants the bar to close near the low below the open so that the month will have a bear body with a big tail above, which is a reversal bar and a signal bar for lower prices in Oct.
32) The bulls on the other hand wants prices to reverse up in the next 3 trading day so that it can close back above the middle of the bar so that it would not be too bearish for Oct.
33) Should the bears fail to create a strong bear close for the month, but price still close below the middle of the month, it is still a sell signal bar for Oct, but a weak one, especially because prices followed a 4 bull micro channel since May and we may find more buyers than sellers below Sept lows at suport areas.
i. I will be looking at around 31 and 29 area as support levels.
Weekly Soybean Oil
34) Soybean Weekly closed as a big bear bar, but with a prominent tail below. This is the first major bear bar since the end of April, which is the first time since then that the bears was able to create any significant selling pressure.
35) However, this bear bar came following a tight bull channel which lasted 4+ months. So we are likely to see more buyers than sellers below the low of thus bear bar at support levels.
36) As I have written previously, unless prices went up in a climactic fashion too excessingly which will cause a very strong reversal, prices usually has to go sideways into a trading range before it will create a proper reversal.
37) This means that we will likely see an attempt to re-test the highs made in in Sept moving forward after this pullback is over. Traders will be looking at the strength of the re-test, whether the buying pressure is strong, or weak and choppy.
i. Take note that the bears are looking for a second leg down after a brief bounce and chances are they will likely get it in the next 1-2 weeks.
38) After the pullback is completed, if the re-test is weak and choppy, and stalls before reaching the highs, traders will conclude that the trend is over and prices will reverse at a lower high or at some sort of double top.
39) It is also important to monitor where the Dollar is trading moving forward. A weaker Dollar will be supportive for SBO prices while a stronger Dollar will likely bring out the bears and cause the bulls to book their profits.
Monthly Dalian Palm Olein
40) So far the monthly chart for palm olein reversed down and is trading close to the lower end of the month’s range with a prominent tail above. Prices reversed lower near the top of the multiyear trading range as the Dollar strengthened.
41) With 3 more trading days to go, and the market closing for the first 8 days of Oct, I will skip this chart until the market reopens again.
Weekly Dalian Palm Olein
41) The weekly bar closed as a bear bar, the first major bear bar near the top of the multi year trading range.
42) Since this market will be closing for the first 8 days of Oct, I will skip this chart until the market reopens again.
Daily Dalian Palm Olein
43) Prices sold off neat the top of the multiyear trading range following a wedge 3 push up pattern.
44) Since this market will be closing for the first 8 days of Oct, I will skip this chart until the market reopens again.
Monthly Dollar Index – DXY
45) Currently, the monthly bar for the Dollar is a strong bull bar after a failed breakout below the low of Aug.
46) With another 3 trading days to go, the bulls wants to maintain a strong close where prices close near the high of the months. The bears on the other hand wants the opposite and wants prices to close to the middle or at least below the middle of the month so that they can reduce some of the bullishness.
47) Should the bulls get that they want and prices close near the high of the month, we should see at least slightly higher prices next month. There is a resistance magnet above at 95.00 which is the weekly 20ema and price may test there first before deciding if it will continue higher or reverse back lower.
48) A stronger dollar is bearish for SB/SBO/Palm which a weaker dollar is supportive for the grains and palm.
Weekly Dollar Index – DXY
49) Price closed as a big bull bar on the weekly dollar chart so we should see slight higher prices next week. Price is currently heading towards the 95.00 level which is the 20ema and that price is a magnet and target for the bulls. We may not see any significant selling until we reach there.
50) We are currently in the second leg of the bull bounce which is what most traders expect. Sometimes prices can extend to a 3rd leg, which means we may see a brief pullback in the next 1 weeks, and then a resumption up to try to break above the 95-96 area.
i. And should price fail to break strongly above the 95-96 area after the 3rd leg up, traders will assume that the bounce is just a 2 legged or a wedge bounce and sell the lower high.
51) In my last update, I have said that the Dollar looks like it is still in its second led down since March, which means we may see another leg down to test the recent low areas of 92-93 levels first, and if manage to break it, then 89-90 in the weeks/months ahead.
52) We need to follow the development of the Dollar closely as SB/SBO/Palm is currently trading inversely to the Dollar. A weaker Dollar is supportive for prices of commodities such as SB/SBO/Palm and vice versa.
Daily Dollar Index – DXY
53) On the daily chart, the Dollar is in a 6 bar tight bull channel which is signs of strong buying. This means that should we see a brief pullback next week, there should be more buyers than sellers and they will buy that first pullback. We should see slightly higher prices as traders will buy the pullback for a 3rd leg up.
54) However, do note that there is a magnet and resistance above for the Dollar around 95-96 area. Should price test that area, and stalls, traders will assume this 3 legged wedge bounce is just a bear rally, and will sell the bounce for a 3rd leg down to test 92-93 level, then 89-90 level in the weeks ahead.
55) Also note that the current price at 94.50 is at the bear trend line (not drawn) and if price can’t break above this trend line, traders will assume that this is just a bear rally, and will sell the Dollar for another leg down to retest support areas.
56) So we need to follow closely how the Dollar is developing moving forward as a weaker Dollar is supportive for prices of commodities such as SB/SBO/Palm and vice versa.
Summary
57) So far, this is the first strong selling pressure since the end of April for FCPO.
58) The bears are looking for a second leg sideways to down after a brief bounce in the next 1-2 weeks.
i. I’m looking at this 2800 and 2650-00 as potential support levels.
ii. After the pullback is over, we should see an attempt to retest the highs.
iii. The manner of the re-test will give us a lot of information about prices moving forward.
iv. A strong re-test of the highs indicate that the strong selling was merely a pullback in the overall trend and;
v. Should we also get a weakening Dollar moving forward, traders will expect higher prices.
i. However, if we see a lackluster re-test of the highs with choppy trading and weak buying pressure, and at the same time, the Dollar continues to strengthen, then we have to be careful because we may see more bulls close their longs and as price re-test higher and bears starting to scale into their shorts towards the high of the trading range.
59) Can prices for palm continue to trade low continuously next week?
i. I think the odds are that the bears will get their second leg down after a brief bounce.
ii. I will be looking if this 2800 area holds, and if not, for next support around 2650-00 area.
60) I’m more of the view that prices will trade lower for a second leg down first, and then attempt a re-test of the highs after testing support.
i. Is there a scenario where price does not have the second leg down, and price just continue to bounce from here to re-test the highs?
ii. The answer is yes, but slightly less probable. If this happens, then the trend will likely continue much higher as the bears will assume the strong bull trend is resuming and the bull will regain control of the market again.
61) For now, this is what I will be monitoring in the next few weeks
i. If the second leg down for the bears happen as odds highly favor it, and if it does, whether the 2800 area can hold, and if not, if 2650-00 area can hold.
ii. For Dollar to consolidate around the 93.50-94.50, and then attempt to test then 95-96 level, which will be the 3rd leg up. If prices does not continue to strengthen from there, sellers will sell this wedge bounce as a bear rally for price to re-test the recent low’s of 92-93 and then 89-90.
iii. After the second leg down is completed, I will be looking for FCPO to attempt to re-test the highs and the manner in which it re-test will tell us a lot about prices moving forward. A strong re-test signals higher prices moving forward.
vi. There is talk about lower production and also rain coming which will effect the production of FFB. So should this materialize, we will see the production of FFB severely effected which is supportive for prices especially as the current stock level is not particularly high.
v. As for exports, I’m still unsure the effect of China being on holiday and the effects it will have on demand. However with Deepavali coming in Nov, we should see some buying from India taking advantage of the recent lower prices.
62) Can prices break strongly above 3150-3200 in Oct/Nov/Dec which is also the top of the multiyear trading range?
i. There is a chance of that happening especially if the USD weaken considerably and trades down to 89-90 area.
ii. We also have to keep in mind that most breakout fails within a few bars so even though prices may break above the 3150-3200 range and trade higher, there is also a 50% possibility that the breakout will fail, especially if we have a stronger dollar during that period of time. So we have to monitor this closely.
iii. The chance of us getting a strong re-test of the highs moving forward will also increase if the production in Oct is seriously hampered by constant rain and flooding which causes lower production.
63) Another thing I would like to point out is this: Is it possible that we see a stronger dollar, which be bearish for prices for SB/SBO/Palm, but instead we still see slightly higher prices for CPO?
i. Yes it is also possible that the global macro factor be bearish, but due to local factors such as our ffb production falling severely due to seasonal lower production or flooding effecting production, our local market may diverge from the global and related market trends.
ii. A good example of this was earlier in Sept where the global market sold off, while SB/SBO/Palm was still holding on.
iii. Ideally, we would like to see all the factors are aligned, but you may not always get that. So I think it is prudent for us to monitor all of the factors as a whole from the Macro factors effecting prices globally such as the USD, SB/SBO to the Micro factors effecting our local markets (such as production, weather, export, demand) individually.
iv. Markets tend to have periods of strong co-relation but also periods of divergences.
64) I will be monitoring the market accordingly to these parameters that I have laid out above. Should there be any major changes, I will update accordingly in a new post.
Thanks and please get in touch if you would like to leave a feedback.
Thanks and trade safe.
Best Regards,
Andrew (Tech Trader)
FCPO | Weekend Market Updates & Analysis 20 Sept 2020 Weekend Market Updates & Analysis 20 Sept 2020
1) Hello All, been a while since my last market updates on 27th March 20 when the market volatility was very high and the “Everything” sell off occurred. A few of you have been asking if I would restart my writings and thoughts of the market, and I too thought I should restart it. It helps me think through all of the factors affecting our palm market and also helps me sort through my thinking.
2) I am making a few changes to my market updates and analysis.
i. I will be covering more instruments that has an effect on palm prices
ii. While previously I kept the number of people receiving this report very small, I am planning to experiment with a blog style website which will be accessible to the public.
Let’s get into the analysis.
Where we are.
4) As of 18th Sept 20, Cpo has rallied strongly in line with Soybean/Soybean Oil’s rally in the USA on the report of strong China demand and bad weather effecting productions.
5) Personally, on top of these two factors, keep in mind that US-China has a trade deal where China has to buy an enormous amount of agriculture products such as Soybean from the USA.
6) So why buy now? For one, the dateline of the trade deal for this year is approaching. But I believe another bigger factor is the weakening of the USD vs the RMB. While a weakening USD is generally not good for regular people earning and spending USD, it is actually a stimulative factor for the economy because a weaker currency encourages and increases that country’s exports, while reducing imports, which will also reduce the trade deficits.
7) So if I were to explain why is China buying a lot more Soybean from the USA now? I would say it as a combination of trade deal agreement, weather effecting crops production, with an overarching weaker USD which makes it advantageous to buy USA exports right now.
8) Such a strong rise in the competing oils has also pushed palm prices up significantly. It only makes sense. If you are looking at SB/SBO rising 1.5-2% daily, would you be short the futures for palm? It would be suicide.
9) As the futures rise, physical would have to rise accordingly too.
10) Add the better local exports and static or slowly declining production for palm for Sept (and possibly all the way into the end of the year), and we are also moving into a seasonally bullish months (year end) for palm.
So, what’s next?
Monthly FCPO Chart
11) So far on the monthly chart, FCPO is still very strong. It is in a bull micro channel, where price never traded below the low of the previous month since May. Currently this month is a big bull bar, and we are testing the highs made in Jan 20.
12) Overall, price has been in a trading range since 2012 (3200-1900). Prices tested the high of this trading range in 2012 and 2016 and around 3150 made earlier this year in Jan, and current Sept is testing it too. Will price breakout from this 3200 range into 3600 or 4000? It is important to remember that most breakout fails within a few bars. However, we need to view that with other factors too which we will look at below.
13) So far, the buying pressure is strong and its being pulled towards the top of the trading range of 3150-3200 area. Sellers will not be selling much until we reach that magnet area, so we are seeing the buy vacuum effect heading up.
Weekly FCPO Chart
14) So far the weekly chart is in a small pullback trend, with a wedge pattern. Currently, we are in the 3rd push up of the wedge which tends to attract profit takers near the magnet targets above.
15) With that being said, from May until now, sellers has not been able to create any strong bear selling pressure as we do not have any consecutive 2 weeks sell off. This reflects a very strong bull and very eager buying of every dip.
16) So for the weekly, I can see a wedge pattern developing, as we head into the high of the 8 year trading range with the top of the channel also around the range of 3150/3200.
Daily FCPO Chart
17) So far on the daily chart, we see the same 3 push up, which is a wedge as we head towards the magnet top of the range above of 3150-3200. Question is, can price break 3200 non stop and continue to go up non stop?
18) If I look at Soybean and Soybean Oil (SB/SBO), they are also in similar price action in that, they are testing the top of the trading range since 2014, and making a double top with Dec 19/ Jan 20 highs.
19) Simply making a double top does not automatically mean prices are coming down. We have to look at all the factors together with these technical observations which I will cover below.
Monthly Soybean Chart
20) Soybean is in a strong rally which started in Aug and continuing in Sept for the reasons described above. It is currently testing the highs made in 2018, which is also the top of the trading range since 2014.
21) There was a break above the top of the trading range in June 2016, which failed on the next bar and price traded back into the trading range. Can Soybean break strongly above the 1074 top of the trading range and continue up strongly?
22) Again, most breakout fails, and we need to look at this matter in conjunction with other factors too.
Weekly Soybean Chart
23) Soybean’s weekly chart is in 1 single leg up to test the top of the trading range, which looks like a buy vacuum of price being sucked up to test the top of the trading range. It is climatic and usually it is not sustainable. However, due to the strong push up, prices usually can’t just reverse down unless the buy up is too extreme. Prices usually has to go sideways into a trading range before it can move down.
Daily Soybean Chart
23a. On the daily chart of Soybean, we see a strong rally from the second week of August, continuous aggressive buying in the first 10 days of Sept despite the global equities and crude sell off, and price has accelerate at a higher pace on the 16th, 17th and 18th of Sept.
23b. The buying is very strong with sellers unable to create consecutive bear bars and unable to trade below the low of the previous day on most days on the daily chart (micro channel) since the rally started around 11th August 20.
23c. However, we are fast approaching the top of the 7 year trading range and we have to see how price reacts there together with the other factors which we will cover below.
Monthly Soybean Oil
24) Soybean oil’s monthly is also testing the top of its 6 year trading range, and also Dec 19 / Jan 20 highs. The monthly chart has had bull bars since May until now, and currently Sept is also a big bull bar.
25) There are 8 more trading days to go, its unlikely that the price will reverse down to close as a bear bar. But a 5 month bull bar on the Soybean Oil chart is climactic and tends to attract profit takers at the top of the trading range.
Weekly Soybean Oil
26) On the weekly chart, you can see very eager buying and there has not been any consecutive bear bar since May 20.
27) Prices is testing the top of the 6 year trading range and the highs of Dec 19 / Jan 20. This is the 3rd push up for SBO, and this 3rd push up has 2 big legs, which tends to be climactic and tends to attract profit takers especially if price stalls near the top of the 6 year range around 35.50-36 area. Also take note that the last leg of a wedge tends to have 3 individual push up, which is a wedge within a wedge.
Daily Soybean Oil
28) On the Daily chart, we can see that price broke above the trend channel line at the end of August, but instead of reversing down, it went sideways and then up from 11 Sept onward. This current leg up has 3 pushes which is also a wedge pattern, and tends to attract profit takers.
29) The sideways consolidation from 27 Aug to 10 Sept is a good candidate for a Final Bull Flag.
Monthly Dalian Palm
30) Dalian monthly is currently testing the top of the 7 year trading range at around 6500. Price has 5 bull bars since May. Will price break above the top of the 7 year trading range of 6500? We need to see this in conjunction with other factors such as palm production, and other competing supply and demand factors as well as the currency markets.
Weekly Dalian Palm
31) On the weekly chart, we can see the same wedge pattern, similar to FCPO, and the current 3rd leg is big and strong.
32) But price is testing the top of the 7 year trading range, and it is a wedge pattern which tends to attract profit takers especially if prices stalls near the top of the trading range of 6500, and we have a strengthening of the USD vs RMB and the crop production and demand data comes out negatively.
Daily Dalian Palm
32a. On the daily palm olein chart, we can see a wedge pattern forming with the current leg forming the 3rd leg up.
32b. Prices are very strong with very aggressive bulls buying, and prices are testing the top of the 7-8 years trading range.
32c. We will have to monitor how prices behaves here, including the other factors that we will be covering below.
Some Observations.
33) Its important to note that prices for SB/SBO/CPO/Dalian has bucked the trend in Sept by going up, while global equities had come down. Even Crude Oil fell for the first 10 days of Sept, which will usually be bearish for Palm/SBO prices.
34) During the earlier pandemic sell down in March 20, Palm/SBO/Dalian followed the broader global markets drop and sold off as well. But this round, it did not. I attribute this current rally in SB/SBO to:
a. First phase of the Trade Deal to buy “an average” of $40 billion a year for the next two years in agricultural purchase targets. We are only in the first year now.
b. Weaker Dollar which makes buying Soybean cheaper which has causes a rally in SBO/Palm.
Above is the chart for the S&P 500, which is currently in a pullback phase since the 1st of Sept.
Above is the chart for Crude Oil, which sold off in the first 8 days of Sept, but has recovered a lot of the move since.
35) Sept was a tough month. I had to decide if prices was going to follow the macro factors like it did in March when prices such as equities were at a major top, or the strong buying of sb/sbo/palm would continue. I choose to follow the macro factor of global sell off, which is not the right decision.
36) Hence from here onward, I will be reducing the co-relation factor for global macro, especially equities from my trading decision making factors.
Moving Forward for FCPO/CPO
37) So, what’s next for our local market. Let’s look at a few factors.
a. SPPOMA looks to be coming in lower as we head into the end of the month.
i. Question: Is production beginning to taper off? General consensus is that production tends to trend lower towards these period of the year which is why this is a seasonally bullish quarter.
ii. Is it possible that due the the rising prices, FFB suppliers are not harvesting as quickly and keeping crops hoping for higher prices next month? I think there is definitely some who are doing this.
b. So far we are having a higher export figure in Sept vs Aug so there is increase in demand. Question is: Will the demand continue in Oct?
38) So looking at prices, I think it should continue to go and test the 7-8 year trading range highs around 3150-3200, and I will then see how prices behaves there.
i. If prices stalls, and we see traders start to take profits there and;
ii. Production in Oct is is much better than expected and;
iii. Demand is trending lower for the month (Oct),
then I think it is logical that we will see some profit taking near the top of this trading range area, as it also coincide with a wedge pattern in its 3rd push up.
But if we have a situation where:
iv. Production is coming off lower and;
v. Ringgit is weakening vs USD, RMB, Indian Rupee and;
vi. We also see demand more or less maintain the current levels or better;
then prices may be able to break above the trading range high of 3150-3200 and head on higher to the next level of resistance.
Currency Outlook
USD – Dollar currency index – DXY
39) So far, USD has been selling off since the high made in March during the start of the pandemic global sell off.
40) Currently price has found some support at around 93.00. If it is forming a wedge pattern, it looks like it is only in its second leg down.
41) Meaning, we have to monitor if price can break lower and form the 3rd leg down to around 89.00 to 90.00 area before we see any significant bounce.
42) So far prices is trading sideways since the end of July, which is a 1.5 months sideways consolidation, which also happens to be a good candidate as a final bear flag with another leg down to 89-90 level.
Above is the Weekly Dollar Index Chart.
RMB/USD Spot
43) RMB has been strengthening vs the USD since June. Price is currently trading around 0.14676.
44) From 1 Aug until 18 Sept, price has has rallied about 3.15% on the 16th of Sept, but has pulled back in the last 2 days of trading this week, with total gains since Aug at 2.8%
45) We have to see how price moves from here. If USD breaks down another leg, it will be a bullish factor for commodities such as SB/SBO which will also effect the prices of Palm as a competing oil because the Chinese Yuan will have more purchasing power vs the USD.
Above is the Daily RMB/USD chart. You can see the strengthening Chinese Yuan against the dollar since July.
MYR/RMB
46) Since the March lows, the RMB has weakend against the ringgit from 1.593 to current 1.6449 which is a -3.22% lower purchasing power of the RMB vs Ringgit.
47) Price has largely been sideways in the last 3.5 months and we are trading back to the July Levels. The Ringgit strengthened against the RMB on Friday. Should the Ringgit continue to strengthened, it is a negative factor for palm demand.
Above is the MYR/CNY pair. The higher the price is, the stronger the Ringgit is. A strong ringgit is not favorable to export/demand.
MYR/INR
48) The Indian Rupee has been weakening against the Ringgit since June 2019. Naturally a weaker Indian Rupee is not a bullish factor for palm prices.
49) The Indian Rupee is currently testing the top Oct 2018 price around 17.90. Should the Indian Rupee strengthened against the Ringgit moving forward, that would be a plus for palm prices.
Above is the daily MYR/Indian Rupee Chart. A higher chart indicates a stronger Ringgit, which is not a favorable factor for export/demand.
Summary:
50) So far, prices in SB/SBO/Palm/Dalian are all trading higher and testing its 7-8 year top of the trading range.
51) This is supported by better demand in SB/SBO from China and weather concerns as well as a weaker USD vs RMB which is favorable for China to buy USA Soybeans.
52) I would want to see what prices does at around 3150-3200 range. Will price stall or will price consolidate sideways first, then resume higher again or would price reverse down?
53) The answer to the above depends a lot on a few of these important factors:
i. Is the USD strengthening or weakening against the RMB? If strengthening, then it will cost more to buy SB/SBO and we might see a reduction in the buying spree there as a result which will dampen the strength in the rally. We need to monitor the USD/RMB pair accordingly.
ii. If USD weaken further, that will provide more support for prices of commodities (including equities and other commodities i.e precious metals) such as SB/SBO which might cause it to break further higher above the 6-7 years trading range top. So this is an important factor to watch.
iii. How is our production for palm moving forward in Oct? Higher? Lower?
iv. How is the demand outlook for Oct? Higher or lower vs Sept?
Other factors to monitor are also:
v. Is the RMB strengthening against the Ringgit? If Yes, that’s good for palm.
vi. Is the Indian Rupee strengthening against Ringgit? A stronger Rupee is good for palm while a weaker Indian Rupee is a negative for palm.
54) These are some of the factors I will be monitoring accordingly.
55) For now, we are entering the top of the trading range which are the targets for bulls, and I will monitor if price stalls at the prices of 3150-3200 and goes side ways or reverses according to what I have laid out in point 53 and point 60.
56) Usually after a big rally where we have a wedge pattern, and price is at a major resistance areas, we tend to see some profit taking because bulls who have been long since May are sitting on a lot of profits and would be looking to book some of the profits, and should price resume after a pullback, they can always buy the dip.
57) Looking forward at next month after such a big rally, especially at a major resistance area, it is logical for prices to experience some sort of pullback or sideways consolidation.
58) So we have to monitor the strength of the pullbacks accordingly. If the pullback is weak, it indicates that the buyers are still strong and controlling the markets and higher prices are likely.
59) If we see a strong pullback, then the sellers are starting to get active again, and longs would start to book their profits too. So we will have to monitor how prices behave after this 3rd spike up in Sept is done.
60) So to recap factors to see moving forward:
i. Is production increasing or decreasing in Oct for palm?
ii. Is the export figure increasing or decreasing for palm?
iii. How is the Dollar trading in relations to the RMB?
iv. What’s the weather situation like in the USA and the crops report? Higher or lower crops production? What is the Demand figure? Higher or lower?
v. How’s Ringgit trading in relation to RMB and INR?
vi. Are there any catalyst for change in prices for sb/sbo/palm?
vii. How strong are the pullbacks after the recent rally? Weak pullback = bullish
viii. How are the global macro outlook looking? (As I have mentioned above, I am reducing this as a factor in my decision making. However, it is also important to have the information as background info, but not use it as one of the main criteria for decision making.
61. Do note that on the monthly chart of FCPO, after every big rally, there is a month of consolidation. e.g. May rally, followed by June consolidation, July Rally, followed by Aug consolidation, and Sept rally, will Oct be a continuation bar or be another consolidation?
62. Keep in mind prices are trading near the top of a multi year trading range, which is a strong magnet and target area for the bulls. We do not know yet if they will start taking profits, or if they will continue to hold their longs.
63. For now, we will have to monitor the developing pullbacks after this move is done to have a good feel of the market moving forward, as well as all of the factors I’ve talked about above.
Thank you for reading and if you disagree with any points I have made, I encourage you to write back to me, and let me know your thoughts and we can discuss it and see which of our thoughts makes more logical sense.
Till the next update, trade safe.
Best Regards,
Andrew (Tech Trader)
FCPO TRADING : 177) short on rebound...?this is haidojo and the number is 177...
as the market price rebound on Friday, we might see the price retest the higher-resistance level at 2900,
or slowly glides down frm the current price...
IF the market retest the 2900-resistance,THEN possible formation of head-and-shoulder pattern...so wait for break to the downside of the neckline at 2800...(we actually already had it...last Thursday)
IF the market glides down slowly frm current price, THEN we can short on rebound...fcpo-dec probably finds some support at the pyschological level at 2700- b4 hitting lower ground at 2600...
IF the market shoot up all the way, or slowly glide up...THEN it has to break abv the previous high-3100, to confirm the new uptrend...or at least abv 2980...
higher resistance : 2900
immediate resistance : 2800
psychological level : 2700
lower support : 2600
WARNING!
RISK DISCLAIMER : this is juz a trading idea...trading stocks, futures or forex might incur a huge risk to your account/funds… DON’T LOSE MONEY THAT YOU CANNOT AFFORD …any idea(s) of trading in this episode SHALL NOT be regarded as a hint of BUYING or SELLING. It is MERELY a trading journal and it has been used for educational purpose only… trade at your own risk!
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