FCPO Nov had to dive down yesterday as Soy oil price was traded lower than expected overnight. The soy oil for Sept was traded 0.81 cents lower, that might explain why FCPO Nov had to open gap down about 20 points from 2,588 to 2,568 level at yesterday morning session. A strong fundamental and perhaps some slight recovery on soy oil in the afternoon might help palm oil futures to recover some ground. The bad news was palm oil futures has topped out, it is not a sure thing that the price would retrace further but I am quite sure that the Bulls are not that aggressive for the time being. There was at least twice failed attempt for the Bulls to break major resistance level at 2,668 level. Palm oil futures is likely going into a sideways price action but nothing serious such as forming a Bearish candle formation yet for long term perspective. Traders are advise to pay attention to current medium term sideways price action as the Nov contract has formed a lower high and lower low candles. This chart formation somehow signify price is likely to be weak until we see a Bullish candle formation such as a higher low in hourly chart. I still confidence that candle formation is the most solid tool, a simple and effective indication to read market direction at any time frame. To look at it objectively, a lower high / lower peak would mean Bull are trying to rally but with less strength to topple previous high. A lower low would mean Bears gain the upper hand because they manage to stomp the price lower than its previous low or major support level at most cases. No doubt palm oil futures sentiment is still enjoying some positive sentiments but do not forget that price in the futures are based on cumulative expectation in the near future or three months ahead for Nov contract. The Bulls we know are likely taking its dance nice and slow. I do not think the Buyers are that hungry or dare to commit to accumulate Long position at this level. Perhaps the market need to fall further or most of us is just awaiting the up-coming important announcement by the Feds from 20th ~ 21st Sept 2016. Do take note that the new benchmark contract will be shift to Dec16 when market re-open for trading on next Monday. Bursa will be closed on this coming Friday for Malaysia day holiday. For today, palm oil futures is likely open higher with recent soy oil recovery. Soy oil for Sept manage to go up about 0.11 cents to 31.62 cents as the time of writing. Range for Nov today is likely 2,550 ~ 2,590.
Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.