Initiate short positions as the downtrend may have resumed. The FCPO shed MYR21 to close at MYR2,084 in the latest session. The low and high were posted at MYR2,070 and MYR2,095. The negative session took place after the commodity came close to the immediate resistance of MYR2,124 in the prior session. To recap, we believe the rebound that started from the low of MYR1,960 is likely to be a counter-trend rebound phase. This came as its prior multi-week sharp reversal reached an oversold reading. With a price rejection from the area near the said immediate resistance being possible, chances are high that the rebound phase has reached an end, and the downtrend may now be resuming. We switch our trading bias to negative.

Our previous long position, initiated at MYR2,086, was closed out at the breakeven point in the latest session. As the downtrend may be resuming, we initiate short positions at the latest close. To manage risks, a stop-loss can be placed above MYR2,124.

Immediate support is still expected at MYR1,940, the low of 27 Nov 2018. This is followed by the MYR1,900 threshold. Moving up, the immediate resistance is set at MYR2,124, the high of 30 Apr. This is followed by the MYR2,200 level.

Source: RHB Securities Research - 31 May 2019