Maintain short positions, with a stop-loss set above the MYR2,200 resistance. The FCPO formed a “Doji” candle with a long upper shadow yesterday. It rose to a high of MYR2,129 during intraday, before ending at MYR2,104 for the day. However, it is not surprising that sellers may be taking a pause following the recent losses. On a technical basis, yesterday’s long upper shadow implied that there was an initial buying momentum during the day before the market pushed it down by the end of the trading session. This implies that the FCPO’s outlook is still negative.

According to the daily chart, the immediate resistance level is now seen at MYR2,129, obtained from the high of 27 Dec. Meanwhile, the next resistance is anticipated at MYR2,200, ie the high of 20 Dec’s “Bearish Harami” pattern. Towards the downside, the immediate support level is maintained at MYR2,071, situated at 17 Dec’s upside gap support. The crucial support is maintained at the MYR2,000 psychological mark.

Hence, we advise traders to stay short, given that we previously recommended initiating short below the MYR2,124 level on 27 Dec. In the meantime, a stop-loss can be set above the MYR2,200 threshold in order to limit the risk per trade.

Source: RHB Securities Research - 28 Dec 2018