Maintain short positions on risk of a further retracement. The FCPO gained MYR11 to close at MYR2,146 yesterday. This came after it swung between a low and high of MYR2,138 and MRY2,161. However, the positive session did not alter the commodity’s negative bias which kicked in after it was rejected from the MYR2,200 immediate resistance on 9 Jan. We continue to expect the soft commodity trend to retest the immediate support of MYR2,093 – where the 30-day and 50-day SMA lines are now clustered around. Hence we maintain our negative trading bias.

As the bears are broadly seen as controlling the price direction, we continue to recommend that traders keep to short positions. We initiated these positions at MYR2,136, the closing level of 14 Jan. For risk management purposes, a stop-loss can be placed above MYR2,202.

Towards the downside, immediate support is set at MYR2,093, the low of 26 Dec 2018. This is followed by MYR2,000. Conversely, the immediate resistance is kept at MYR2,200, the high of the 20 Dec. This is followed by MYR2,265, the high of 17 Oct.

Source: RHB Securities Research - 16 Jan 2019