Immediate support breached; keep to short positions. The FPCO performed negatively in the latest session as it formed a black candle, which at the closing, breached below the previous immediate support of MYR2,186. The session saw the commodity register a low and high of MYR2,144 and MYR2,187, before ending at MYR2,147, implying a decline of MYR39. The negative session suggests the commodity’s YTD downtrend is extending. This is despite the daily RSI reading reaching an oversold level of 22.4. Even so, until there are signs of a rebound, the weak price trend would remain in force. On this, we maintain our negative near-term trading bias on the commodity.

Given the price retracement is extending and not showing signs of a rebound – despite the oversold daily RSI reading – we continue to recommend that traders keep to short positions. We initiated these positions at MYR2,204, the closing level of 11 Jul. For risk management purposes, the trailing-stop can be set to the breakeven level.

We revise the immediate support to MYR2,100, the next round figure. This is followed by MYR2,000, a round figure.Towards the upside, the immediate resistance is now pegged at MYR2,186, the low of 12 Jul 2016. This is to be followed by MYR2,272, the high of 10 Jul.

Source: RHB Securities Research - 16 Jul 2018