In a post on 24 Dec titled "Chart Reading: Golden Agriculture", I said that there is strong support at 46c provided by the rising 50dMA and 100dMA but I would do a partial divestment if price hits 50c in the short term. This is largely because there is a lack of buying momentum in the short term and the price might pull back to support upon hitting 50c. I would buy more at closer to 46c in such an instance. The lack of buying momentum is quite clear on the daily chart with the MFI forming lower highs and the MACD flat.
Over the longer term, I continue to believe that Golden Agriculture is going up. Looking at the weekly chart, it becomes quite clear why 50c is a major resistance. That resistance is provided by the declining 100wMA, currently at 51c. Rising 20wMA is at 46.5c. Overcoming the 100wMA will take some time but it will happen as the rising 20wMA seems on course to form a golden cross with the 100wMA in the next few weeks. This gels with certain views that demand for crude palm oil will strengthen towards the Chinese New Year celebrations.
Strategy: Take some profit off the table if price hits 50c. This is a hedge in case price weakens to support. Buy again at support or close to it if this happens. Overcoming the 100wMA in time will give a target price of 62c. Why Golden Agriculture?
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