Ride on the rebound; maintain long positions. The soft commodity performed positively in the latest session. It closed MYR41 higher at MYR2,066, and prices for the day ranged between MYR2,029 and MYR2,069. The positive session indicates that the counter-trend rebound that started from the low of MYR1,960 is still developing. Looking at the recent sessions’ performance, it is still highly probable that the rebound phase will be extended still. Recall that this rebound phase set in after the commodity experienced a relatively sharp multi-week retracement which hit an oversold level recently. We maintain our positive trading bias.

As the price actions imply the rebound phase still has the potential to go higher, traders are advised to remain in long positions. This was initiated at MYR2,086, the closing level of 16 May. To manage risks, a stop-loss can be placed below the MYR1,960 level.

Immediate support is expected at MYR1,940, the low of 27 Nov 2018. This is followed by the MYR1,900 threshold. Meanwhile, the immediate resistance is set at MYR2,124, the high of 30 Apr. Breaking this could see the market challenge the MYR2,200 level.

Source: RHB Securities Research - 28 May 2019