Maintain short positions as YTD downtrend still in place. The FCPO ended Friday’s session positively. It gained MYR22 to settle at MYR2,193. The intraday tone was encouraging as it generally trended higher with a low and high posted at MYR2,179 and MYR2,201. Still, the commodity is capped by both the 30-day and 50-day SMA lines – indicating that the weak trend is still in place. Additionally, the rebound from the low of MYR2,137 on 20 Sep is weak – similar to the price rebound pattern between Jul and Sep. Chances are high that the YTD downtrend may resume, should the MYR2,137 level be broken.

As the risk of the commodity continuing its YTD downward move is still high, we recommend traders to keep to short positions. We initiated these positions at 8 Oct’s closing level of MYR2,187. For risk management purposes, a stop-loss can be placed above MYR2,235.

Towards the downside, the immediate support is set at MYR2,137, the low of 20 Sep. The second support is at MYR2,100. Conversely, the immediate resistance is set at MYR2,235, the high of 5 Oct. This is followed by MYR2,303, the high of 5 Sep.

Source: RHB Securities Research - 15 Oct 2018