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Crude Oil Futures Price

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SEPT CPO futures closed lower by RM36 at 2479 on relatively low volume of 6,092 lots.

1. We choose to take profits on longs.

2. We are out of the market today as a bearish harami was formed, which depict uncertainty.

3. If CPO continue to rally and breakout @ 2498 OH, we would re-enter long. If CPO violates 2443 OL we would enter short.

4.There is still a possibility of CPO hitting the next target of 2560 – the 62% Fibonacci rebound target.

5.We are now not sure if CPO can correct back down to test 2153. It is possible that the Wave 4 correction may well be over.

6. If CPO can rally past 2560 and higher, we would prefer to go long. CPO may well be playing out a pattern just like that on the FKLI during the China stocks tumble on Feb 27.

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 or we may have a further rebound. We are not too sure as yet.

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 55.50 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.

Crude Oil Futures Price

OCT CPO futures closed lower by RM2 at 2478 on similarly high volume of 13,055 lots.

1. CPO yo-yoed yesterday. It was not easy if one had traded yesterday as price went south and then north, and south again.

2. Although volume was very high, sellers did not manage to keep prices down by day’s end, and this may suggest strength, or a selling climax.

3. We are wary of a market bottom as a black hammer was formed yesterday. We would cut loss on shorts at 2518 OH. But we would not turn long until price rises above 2600.

4. Note that it is possible that prices may be supported by the Ichimoku chart support at 2442.

General commentary: CPO is choppy and is trading within a range. Reduce position size. We fear the fall in the KLCI could hurt CPO’s rally but on the other hand CPO did not manage to close near its low of 2414. Watch for a retest of 2414. Any close below 2414 confirms weakness.

Next upside targets: 2743/3008/3046 (targets revised on July 6)

Downside support:2459(hit)/2226/2153

Ichimoku chart: (Based on kumo (clouds), CPO tested its new support of 2443 yesterday. Ichimoku chart will turn short @ 2442 OL

(updated on Aug 6, 2007)

Average True Range for CPO: A.T.R. is 63.21 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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Fred Tam has sinced written about articles on various topics from Investments, Stock and Investments. Fred Tam is the owner of and

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