Kuala Lumpur Crude Palm Oil Futures - Forecast for the day - 04 July 2007!

Kuala Lumpur Crude palm oil futures: Take profit at 2560/S.A./Sell-stop @ 2484 OL

SEPT CPO futures closed higher by RM47 at 2515 on relatively high volume of 8,232 lots.

1. CPO continued higher yesterday and it is clear that it is rising further to test the next target of 2560 the 62% Fibonacci rebound target.

2. We would take profits there and stay out.

3. We would short if it cannot exceed 2560 as our view is a correction after 2560 is hit!

4. If you still want to hold onto longs, the sell-stop is at 2484 OL. This stop loss level is a tick below the low of the 5-minute charts long white candle at 1730 hours yesterday.

General commentary: We were absolutely right! CPO pierced and closed above the reaction high of the W bottom. With this breach, we expect CPO to race towards 2560. What happens after 2560? We expect a correction. But we would only short below 2560. Any price above 2560, we are staying out.

Next upside targets: 2560/2749 (hit)/3313 (targets revised on June 5)

Downside support: 2153

Ichimoku chart: (Based on kumo (clouds), CPO is long. Kumo support is at 2111. Ichimoku chart will turn short @ 2110 OL (updated on June 11, 2007)

Average True Range for CPO: A.T.R. is 60.57 for CPO. This implies you need to put a stop above/below this A.T.R. or you can get stopped out due to the volatility factor. We advocate a 1.5 x or 2 x the ATR. We are using a 5 days ATR.

Fred Tam is the owner of Marj Blog98239
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