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Golden Agriculture: Waiting to increase exposure.

Sunday, April 17, 2011

Although I might not blog about it as much as before, regular readers of my blog would know that I like Golden Agriculture as I feel that CPO's price has only one direction to go in the foreseeable future. Golden Agriculture, amongst the CPO counters listed in Singapore, is the most levered to CPO's price.

I have been waiting for a meaningful pull back to increase my exposure to this counter. In an uptrend, it would mean waiting for a retest of supports before buying. The instances when I was impatient and when I chased prices higher were instances which I regretted, more often than not.

So, is Golden Agriculture in an uptrend? No doubt about it. When to buy more? Ah, that's the question that is more interesting for most people, I am sure.

If we connect the highs of 4 March and 11 April, we get a trendline resistance.  If we connect the lows of 23 Feb and 15 March, we get a trendline support. If we take a step back, we might see that this is an uptrending channel. If we look at the candlesticks, we see significant resistance at 72c and support could be found at 65c.

Price touched a low of 68.5c in the last session which is where we find support provided by the 50dMA. If this were to break, we could find the rising 200dMA tested for support and this is at 66.5c. Having failed twice as support before, it does not seem very trustworthy and people could possibly choose to err on the side of caution and wait for a retest of channel support which should approximate 65c next week. Buy some if the 200dMA should be tested (as a hedge) and buy more if channel support should be tested later? Sounds like a strategy I would employ.

The chances of price going lower are high. The +DI now coincides with the -DI and the ADX is under 20. There is no trend per se and we could see the Stochastics move lower to test its own trendline support. A bearish crossover on the MACD is a foregone conclusion while the MFI and RSI have broken their respective trendline supports. I will wait to accumulate at stronger supports.

Related post:
Golden Agriculture: Alarm bells aplenty?


girl said...

hi, im a newbie at technical analysis. can i please ask where can we find charts like the one you have plotted for golden agri? with the moving averages, RSI and stochastic? thanks for ur help!

AK71 said...

Hi girl,

Google "ChartNexus" and I think you can download the charting software for free.

Personally, I am using "ChartNexus" but mine is provided by my broker, Lim&Tan. Happy charting. :)

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