Thursday, February 23, 2017

23 Feb 2017: FCPO Commentary

22nd Feb 2017: Soy Oil Traded 0.10 Cents Lower, On-Shore Ringgit Traded Slightly Unchanged @ RM4.4510 Per USD.
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Palm oil futures daily candle is showing a sign of rebound soon, it has formed a candle called "Hammer". The Hammer is a bullish reversal pattern that forms after a decline. In addition to a potential trend reversal, hammers can mark bottoms or support levels. After a decline, hammers often signal a bullish revival. The low of the long lower shadow implies that sellers drove prices lower during the session. However, the strong finish indicates that buyers regained their footing to end the session on a strong note. While this may seem enough to act on, hammers require further bullish confirmation. The low of the hammer shows that plenty of sellers remain. Further buying pressure, and preferably on expanding volume, is needed before acting. Such confirmation could come from a gap up or long green candlestick on today opening session.  Hammer candles are similar to selling climaxes, and heavy volume can serve to reinforce the validity of the reversal. Vol for the May contract surge to 42,390 lots yesterday compare to 34,470 lots on previous Tuesday. Trade #188 has to hit break even stop loss when the market recover from a 19 points favorable move. I had to move the SL to break even points as it was part of the risk management regime and sometime the trade does went back to its potential take profit points after the SL level has been done. I guess you cannot win all the time when it comes to managing risk. There is a Long trade setup on yesterday closing bell, The valid Long level would be at 2,814 ~ 2,816 area for May contract. Now, I am not saying anything about the certainty of market rebounding today as soy oil is still trading slightly lower this morning, but the single hammer formation on daily chart is something worth looking at. For today, palm oil futures is likely open slightly lower on soy oil weakness. The soy oil for March contract was traded 0.10 cents to 32.85 cents as the time of writing. Range for May contract is likely moving within 2,790 ~ 2,840.

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.

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