No change in negative trend; maintain short positions. Yesterday, the FCPO formed a black candle and settled near the session’s low – which pointed to a bearish session. The low and high were registered at MYR2,273 and MYR2,292, before the FCPO closed MYR13 lower, at MYR2,277. While its daily RSI reached an oversold level of 25.5 on 21 Jun, the subsequent sessions’ price actions do not indicate that a deeper rebound is in the making. This suggests that the overall weak price trend is still valid. Additionally, its medium-term negative bias is still intact – as it continues to trade below the downtrend line (as drawn in the chart) as well as both the 30-day and 50-day SMA lines. Based on these factors, we keep our near-term negative trading bias.

For now, as long as the commodity is capped by the immediate resistance of MYR2,336, chances of a deeper rebound happening are low. As such, we continue to advise traders to keep to short positions, initiated at MYR2,263, ie the closing level of 19 Jun. To manage risks, a stop-loss can be set above MYR2,336.

Immediate support is envisaged at MYR2,253, the low of 26 Jul 2016. Breaking this could see market test MYR2,186, the low of 12 Jul 2016. Towards the upside, the immediate resistance is now set at MYR2,336, the high of 14 Jun. This is followed by MYR2,413, the high of 6 Jun.

Source: RHB Securities Research - 27 June 2018