Maintain long positions as the SMA lines are marginally breached. The FCPO formed a white candle at the closing yesterday, marginally breaching above both the 30-day and 50-day SMA lines – indicating that the bulls are in control. The intraday tone was positive, as the commodity generally scaled higher for the entire session, from a low of MYR2,201 to a high of MYR2,232, before closing MYR31 higher at MYR2,230. This supports our view that the FCPO is in the process of developing a deeper corrective rebound. This rebound phase set in after it underwent a relatively steep retracement in September. Hence, we maintain our near-term positive trading bias.

As the corrective rebound continues to show signs of extending, we still recommend that traders keep to long positions. We initiated these at MYR2,199, the closing level of 3 Oct. For risk management purposes, a stop-loss can be placed at below MYR2,137.

The immediate support is maintained at MYR2,137, the low of 20 Sep. This is followed by MYR2,100. The overhead resistance is pegged at MYR2,303, the high of 5 Sep. Breaking this may see the market test MYR2,348, the high of 29 June.

Source: RHB Securities Research - 5 Oct 2018