FCPO - Would Wilmar's Action Dampen The Bulls ? - 2/17/2014

The market cleared the 2604 resistance level swiftly and continued to proceed to the upside. The MACD is now above its zero signal line which is good news for the bull. The Stochastic remains positive but it is now inside the overbought zone. The DMI is also positive and the D+ is above 30's , this is signifying the buyers have been strong. As the ADX has just begun to rise, I would still keep an eye on the overbought Stochastic before switching over to the MACD. This is especially so as last Friday's Japanese Candlestick was a Spinning Top. Since this appears at a recent high level (it failed to close above another recent fractal high of 2669 which is also its weekly fractal high), this could mean the current bull rally could come to an end (even though it may just be a temporary one) So I would suggest you should place a stop at last Friday low of 2654.

 
The weekly changes a bit as the Stochastic has turned positive but the MACD remains negative - a pair of contradicting indicators here. The DMI stays positive and the D+ rises which mean the buyers are back. The ADX has just gone flat, this could mean the market may be getting ready for a new cycle. Of course the most important development would be price has closed above the top band and the most recent black candlestick high of 2629. This is something new here that some traders call it as the 3 Candlesticks Reversal Formation, but I do not want to place too much emphasis here as I do not want to have too many tools in a trading system. All you need to know is that it represents a buy signal. But the regret is that price has failed to close above the important fractal high of 2669 as price went up and tested the high but fell back and closed at 2667. But we still have a new buy signal here as price closed above the top band with a positive Stochastic, so if I am trading the weekly chart, I would buy if price can go above 2688 in the coming week .

Summary - the weekly chart just flashed a new buy signal that is waiting to be cleared by the filter in the coming week. The daily chart may be overbought so I expect some kind of retracement or consolidation. But overall there is no new evidence to worry bout the bear yet. Last week towards the market ending, there was a news about Singapore Wilmar will stop buying palm oil from Sarawak. Wilmar's action is most probably due to increasing pressure from their EU customers who in turn are bowing to the Tree Hugging Hippies' Green Earth agenda. Would this news pour some cold water on the bull ?