Morning Update - 28th March 2011 - Pullback in overseas market

The US market pulled back and we will wait for more price action to plan the trades ahead.

The grains mainly soybean oil, soybean, wheat and corn all had pullbacks as well. Expect the Fcpo to open lower today.

I will update on the levels again shortly.

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Ok Morning all,

Last night last night the US market closed down but not significantly. the Dow closed down 44 points or 0.33%, S&P close down 4 points or 0.28%, and the Nasdaq close down 2 points or 0.07%. This downward push was mainly towards the end of the day.

The CME grains closed as per below:

Soybean Oil Futures 55.08
Soybean Futures 1372
Wheat Futures 641
corn Futures 631

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What are my views today:

Ok lets start with the KLCI first as it will open soon.

We will have to see how the price action play out today. I think we might see a bit of selling too in line with the other regional market. As of now, the Nikkei 225 is down 104.92 or 1.02% already.

Can price recover? Its difficult to say for today. I am still biased to the long side for the week. If you were holding the long since Monday, today's price action should only represent a small pullback for you. But if you are a new long, I think there is no need to panic as there should be some levels of support at around 1583-1585 area. The lower major bottom trend line stands at 1576 which should not be breached with strength if this uptrend is to resume.

If you are scalping as a buyer, maybe you can look for areas of support as indicated by today's price action and buy on support and take your cue from the other regional markets especially the major Asian markets and the US futures. If you are looking to short, you can ride the momentum of the sellers and take quick profits as I think we will drift down slowly with the occasional rebound and not in a straight down fashion.

I will update on the major Asian indexes and US futures when there are any significant changes.


Open updates: Ok we opened at 1589.00 down 3 points from yesterdays closing of 1592.00


Trade safe.

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FCPO

The hourly on the 4 CME grains looks like it might still come down a bit more. Price are still trading within our weekly range with support levels on the weekly chart that I posted over the weekend. There should be support around these areas.

Soybean Oil Futures - Soybean Oil seems to have found some support and is now forming sort of a flag/pennant kind of pattern. This could be a continuation pattern, or it can also be a reversal pattern depending on where it breaks out. What it means is that, price have paused its downward drive for the time being.

Soybean Future - This contract is also forming a flag pattern and we will have to see where price breaks out.

Wheat Futures - Wheat seems to have found some support at 640 for now. But the chart patten looks a bit bearish on the hourly. 637-640 is actually the lower trend line of the smaller triangle pattern within the larger triangle and is the possible lower range of our weekly forecast. This level should hold and if it does break down, we should find some support at around 605-610.

Corn Futures - Corn has been demonstrating sharp selling tendencies for the past two days. The hourly looks like big strong selling, followed by a period of slow drifting up, and more sharp selling again. Price is now pausing and forming small bars. Price may hold and go back up a bit but I think more selling might come in.

How will these affect us - FCPO:

Ok firstly.. I'm glad that Soybean Oil and Soybean Futures are pausing their downward push and may rebound a bit from here. Our FCPO should open a bit lower today. But I am still biased on to the long side for the week.

If you are long since Monday, this should also be a small pullback for you. If you are a new long, I think you should find some support at around 3467 and 3436.

If you are scalping, I think a good strategy would be to look for areas of consolidation and trade the break outs from the area in either direction by using stop orders on both side of the consolidation area. This way, you do not need to care which way it breaks, but still be in the position to take a quick scalp when it does eventually break out.

The Corn and Wheat futures are looking a bit weak for my taste.. but who am I to say what it would do right? We will just trade what the market gives us and follow its price action. But I believe if these two contracts resume its downward march, it will definitely be a drag on the Soybean oil and soybean futures price which will eventually affect our FCPO.

So I will be watching these products closely and will update all of you accordingly.

Trade safe!

Regards,
Tech Trader