Initiate long positions as the bulls are taking back control. The FCPO formed a white candle last Friday and, at the closing, nudged above the MYR2,171 threshold. We regard this as a signal of bullish control returning. The commodity generally moved higher for the session, with a low and high of MYR2,144 and MYR2,178, before closing MYR21 higher at MYR2,172. The current uptrend started after the commodity tested the 50-day SMA on 26 Dec 2018, suggesting the positive trend that kicked in from the low of MYR1,940 on 27 Nov 2018 is likely to be extended. As such, we switch our trading call to positive.

Our previous short positions – initiated after the commodity crossed below MYR2,124 on 27 Dec – were closed out at MYR2,171. As we believe that the bulls have taken back control of this market, we initiate long positions at the latest closing. For risk management purposes, a stop-loss can be placed at MYR2,093.

The immediate support is revised to MYR2,093, the low of 26 Dec 2018, followed by MYR2,000. Conversely, immediate resistance is expected at MYR2,200, the high of the 20 Dec. This is followed by MYR2,265, the high of 17 Oct.

Source: RHB Securities Research - 7 Jan 2019