Technical View

As we mentioned in our previous update last month, the RM124/tonne “Downside Gap” created on 23 Feb 2010 had violated the CPO market’s near-term solid uptrend. The violation was also

confirmed with another RM59/tonne retracement in the subsequent trading day. That means that the uptrend which started since the mid-term downtrend line was violated in October last year has come to an end.

In view of the possibility that the CPO market could be in the midst of creating a major lower high, it also looks like the market could be starting to create a new downtrend channel. Anyhow, whether the market is creating a downtrend channel or not will not alter our bearish view towards the near-term market. We had previously shifted our view to bearish after the solid uptrend was violated. It was our first shift of view since October last year.

We have identified a few support levels which the market may be testing in the coming months. First support is seen at the RM3,336/tonne level, followed by the RM3,103/tonne level and the 3,000/tonne psychological mark. To the upside, there is immediate resistance at the RM3,514-RM3,669 / tonne area, which is represented by the massive “Downside Gap”. Next resistance is seen at the RM3,815-RM3,933/tonne area.