Initiate long positions as a deeper rebound is developing. The FCPO formed a white candle which, at the closing, decisively crossed above the previous immediate resistance of MYR2,058. The session’s low and high were at MYR2,043 and MYR2,099, before it settled at MYR2,096, indicating a gain of MYR51. The upside breach of the said previous immediate resistance has, in our view, confirmed that the commodity’s recent weeks’ sharp retracement – which reached an oversold level recently – has registered an interim low, ie MYR1,960. This suggests it may be, at the minimum, staging a countertrend rebound. As such, we change our trading bias to positive.

Our previous short positions – initiated at MYR2,154, the closing level of 11 Apr – were closed out in the latest session at MYR2,058. On the bias that a rebound is in the making, we initiate long positions at the latest closing level. For risk management purposes, a stop-loss can be placed below MYR1,960.

We are still keeping the immediate support at MYR1,940, the low of 27 Nov 2018. This is followed by MYR1,900. Moving up, immediate resistance is now at MYR2,124, the high of 30 Apr. This is followed by MYR2,179, the high of 25 Apr.

Source: RHB Securities Research - 17 May 2019