Maintain short positions as the retracement leg is progressing. The FCPO performed negatively in the latest trading session – it ended MYR27 lower at MYR2,260. The intraday tone was negative as the commodity generally trended lower, with the high and low registered at MYR2,311 and MYR2,256. The negative session is part of the commodity’s ongoing retracement phase after it experienced a relatively sharp multi-week upward move previously. We are expecting this retracement leg, at the minimum, to retest the 200-day SMA line. Further downside may materialise should the said SMA line give way along the process. The Daily RSI reading that continue to edge lower is also supportive of the bearish bias. Maintain negative trading tone.

With the bears continuing to show strength over the bulls and the commodity continuing to retrace towards the 200-day SMA line, traders are advised to 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.

We continue to peg the immediate support at the MYR2,200 mark, a round figure. Breaking this may see market fall to 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 - 20 Feb 2019