TECHNICAL VIEWSMarket is looking firm to hold above the 1900 level mark while trading in a tight range bound. Immediate technical outlook remains in the consolidation phase within its sideways move.
Stochastic movement is still sideways with less change with %K and %D at 48% and 52% zone respectively. While, parabolic is recommended holding short with a buy stop at 1992. Market may continue to trade sideways in near term as technical indicators are showing mix view. For now, support is looking at 1828-1830 followed by 1790-1798 (gap leftover on 4/2/2009) and resistance is at 1945-1969 followed by 2000-2017.
REVIEW & STRATEGYThe CPO futures extended surge on short-covering activity and mild speculative-led buying momentum. The MAY delivery contract climbed RM34 to finish at RM1’940/MT.
The benchmark MAY delivery contract managed to power through the overhead range resistance at RM1’920/MT, encouraged by the advance in the Crude oil futures. Moreover, this “short-squeeze” (above the RM1’920/MT level) also uncovered many pre-placed stop-loss orders on the way up, feeding the positive momentum further.
This is clearly a “short-squeezing” manoeuvre aiming at “washing-out” the “stale bears” of the past few sessions. However, this “short-term spike” may have its limitation at the tough resistance area around RM1’943-50/MT. Failure to overcome or sustain above this resistance would spells disaster for the ambitious bulls as the market is in need of a short-term technically-led “price-recoil”. And levels above the RM1’944/MT region would be an ideal for fresh “short-selling”.
Recommendation >>> SELL INTO STRENGTH
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