Initiate short positions as the prior advancing trend hits a wall. The FCPO formed a black candle in the session and at the closing, it breached below the MYR2,300 mark – this signalled the possibility that the upward move that started from the low of MYR1,940 on 27 Nov 2018 has reached an end, and that a deeper retracement may be now developing. The session saw the commodity reach a low and high of MYR2,289 and MYR2,312, before closing MYR28 lower at MYR2,290. At this juncture, we expect this retracement leg to, at the minimum, retest the 200-day SMA line. Hence, we switch our trading call to negative.

Our previous long positions initiated at MYR2,226, the closing level of 18 Jan, were closed out at MYR2,300 in the latest session. On the bias that the FCPO is now retracing, we initiate short positions at the latest closing. To manage risks, a stop-loss can be placed above MYR2,344.

The immediate support is now set at MYR2,200, a round figure. This is followed by MYR2,134, the low of 14 Jan 2019. Conversely, the immediate resistance is revised to MYR2,344, the high of 7 Feb. This is followed by MYR2,400, a round figure.

Source: RHB Securities Research - 11 Feb 2019