Maintain short positions as the retracement leg is still in force. The FCPO failed to sustain its earlier session’s gain in the latest trading. Intraday, it generally moved lower, the high and low were posted at MYR2,278 and MYR2,250, before closing at MYR2,257, indicating a decline of MYR7. Overall, we continue to regard the retracement leg that started from the 7 Feb’s high of MYR2,344 as still valid – this was despite the rebound from the 200-day SMA area in the prior session. So far, the said retracement leg is still considered as a consolidation phase after the commodity experienced a multi-week’s upward move between end-Nov 2018 and early Feb 2019. This sent its daily RSI reading into the overbought territory recently. Maintain our negative trading bias.

As the retracement leg is not showing any signs of ending, we continue to suggest that traders maintain 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 expected at the MYR2,200 mark. The second support is at MYR2,134, the low of 14 Jan. On the other hand, the immediate resistance is expected at MYR2,344, the high of 7 Feb. This is followed by MYR2,400.

Source: RHB Securities Research - 25 Feb 2019