Maintain short positions as the bears are still in firm control. The FCPO formed a black candle in the latest trading – indicating it was led by the bears. The session’s low and high were at MYR2,147 and MYR2,171, before it closed MYR19 weaker at MYR2,150. This has placed the commodity further below the 30-day and 50-day SMA lines, both of which are also starting to edge lower – indicating a negative bias. The daily RSI reading of 41.50 also indicates that the momentum is weak. Towards the downside, a firm breach of the immediate support of MYR2,137 – YTD low point – would signal the resumption of the YTD negative price trend. Hence, we maintain our negative trading bias.

With the weak price trend continuing to play out, and the YTD weak price trend may be resuming, we continue to recommend traders to keep to short positions. We initiated these positions at MYR2,148, the closing level of 26 Oct. For risk management purposes, a stop-loss can be placed at MYR2,265.

We still peg the immediate support at MYR2,137, the low of 20 Sep. The following support is at the MYR2,100 mark, a round figure. On the other hand, the immediate resistance is now set at MYR2,265, the high of 17 Oct. This is followed by MYR2,303, the high of 5 Sep.

Source: RHB Securities Research - 1 Nov 2018