Retracement phase still not showing signs of ending; maintain short positions. The FCPO trended lower yesterday, and closed at the day’s low of MYR2,213, indicating a decline of MYR44. The high was at MYR2,278. The intraday reversal and the breakdown from the 200-day SMA line – albeit marginally – indicates that the retracement that started from the high of MYR2,344 on 7 Feb is still firmly in place. The downside risk may increase if the commodity fails to regain ground above the SMA line in the coming sessions. Hence, we maintain our negative trading tone.

As the retracement leg is still progressing and the giveaway of the SMA line lends strength to this bias, 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 maintained at the MYR2,200 mark. The following support is expected to emerge at MYR2,134, the low of 14 Jan. Conversely, the immediate resistance is set at MYR2,344, the high of 7 Feb. This is followed by MYR2,400.

Source: RHB Securities Research - 26 Feb 2019