Maintain short positions as the retracement is developing. The FCPO formed a third consecutive black candle yesterday. The intraday tone was negative as the soft commodity generally slid lower for the whole session, with a high and low of MYR2,290 and MYR2,264. It closed at MYR2,266, indicating a decline of MYR24. The negative session reinforces our thesis that the commodity is due for a retracement after the prior multi-week’s relative sharp rebound. We expect to see the 200-day SMA line being retested and stick to our negative trading bias.

As the retracement is still developing, traders should stay in short positions. These were initiated at MYR2,290, the closing level of 8 Feb. To manage risks, a stop-loss can be placed above MYR2,344.

The immediate support is pegged at MYR2,200, a round figure. This is followed by MYR2,134, the low of 14 Jan. Moving up, the immediate resistance is expected at MYR2,344, the high of 7 Feb. This is followed by MYR2,400.

Source: RHB Securities Research - 12 Feb 2019