Kuala Lumpur : Crude Palm Oil Futures

Kuala Lumpur crude palm oil futures: Maintain long/Sell-stop @ 2424 OL/F.B. @ 2501/T.P. @ 2560
SEPT CPO futures closed higher by RM32 at 2457 on relatively high volume of 11,525 lots.

1. We were again correct in calling for a buy and a “gap” to make up for the change of contract
month.

2. We are maintaining long but place sell-stop at 2424 OL to exit longs. If you want a tighter
stop, then use yesterday’s low, i.e. @ 2444 OL to exit longs.

3. If CPO breaches 2500, then “further buy” @ 2501 OH.

4. Next target is still at 2560.

General commentary: We were right about our “F. Tam white inside out up” pattern, which resulted in a higher close, up by RM32. Today CPO may consolidate or may rally to test 2560. We doubt it will stage a sharp pullback. But in case it does, our sell-stops are either at 2444 OL or 2424 OL.

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

Downside support: 2466(hit)/2393(hit)/2307/2223/2153

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 112.36 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.

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