Maintain long positions. Last Friday, the FCPO formed a black candle. For most of the session, it stayed in positive territory – which suggests that the session was under the bears' control. For the intraday, the low and high were registered at MYR2,264 and MYR2,297, before it ended at MYR2,266 – implying a decline of MYR18. The recent consolidation – which is developing as a deep retracement – does not change our bias for the commodity to extend its rebound. We believe that once this consolidation is completed – signalled by an upside break of MYR2,348 – the rebound would be extended further, with a minimum target of testing both the 30-day and 50-day SMA lines. Hence, we keep to our near-term positive trading bias.

As we still expect the FCPO to test both the 30-day and 50-day SMA lines, provided the recent low of MYR2,238 is not breached, we recommend that traders keep to long positions, initiated at MYR2,343 – the closing level of 28 Jun. To manage risks, a stop-loss can be set at MYR2,238.

We expected the immediate support to emerge at MYR2,238, the low of 21 Jun. The second support is set at MYR2,200. Towards the upside, the immediate resistance is now set at MYR2,366, the high of 12 Jun. This is followed by MYR2,413, ie the high of 6 Jun.

Source: RHB Securities Research - 9 Jul 2018