9th March 2017: FCPO Commentary

8th March 2017: Soy Oil Traded 0.43 Cents Lower, On-Shore Ringgit Traded Unchanged @ RM4.4580 Per USD.

I manage to take some breather yesterday when trade #202 made some partial gain on the evening session. Trade #202 was a Long setup at 2,848 level and this position cannot hold overnight due to price is below 21 days-EMA on daily chart. Price for May was doing around 2,867 ~ 2,869 area when the clock strike 5.30PM, I had to make a call right at that time because that was the cut off time for me to exit any intraday position. Fortunately traded #202 manage to exit at 2,868 level right at that time, it was 20 points gains. This is after I had 4 losing streak in a row, since last two weeks. Negative news are circling around regarding high likelihood of production spike coming this end of month. Indonesia’s palm oil output was expected to reach 35 million tonnes in 2017 year from 32.10 million tonnes recorded in 2016 while Malaysia’s output would increase to 19.85 million tonnes from 17.32 million tonne previously. I think the gradual increase in palm oil production would curb palm oil price to recover for the time being. Of course that was the expectation on the fundamental side, but how market would re-act to it is a different story. If you look at the price action, the positive closed on yesterday daily candle suggest that there is abundant of upside today if the market open higher. If you still recall the 1-2-3 chart pattern on daily chart that I mentioned for the last two days, I didn't expect the retracement move from #2 to #3 would complete so soon. As you can see, the #3 move of the 1-2-3 chart pattern is complete if the May contract manage to breach above 2,900 level. If you are a conservative trader or a trend trader for a 1-2-3 chart pattern, a standard drill to enter Long position will be at the break of previous high, which is at 2,900 level. The risk reward for this trade setup would be at least 1:2, starting on placing your final stop loss at 2,820 (the new low of yesterday candle) and target about 200 points on the upside. That is how a 1:2 risk reward is properly derived, I know it will be a long shot looking from here but that is how those trend traders look at price when they enter their positions. For today, palm oil futures is likely open lower due to overnight soy oil weakness. The soy oil for May contract went down about 0.43 cents to 33.56 cents this morning. Range for palm oil May contract is likely 2,880 ~ 2,830.

 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.