Maintain short positions on the anticipation of downtrend resumption. The FCPO failed to maintain its earlier session’s positive tone, as it closed MYR15 lower at MYR2,069. It reached a low and high of MYR2,065 and MYR2,093. Broadly, we believe the risk is high that the commodity is resuming its downtrend that started from the high of MYR2,344 on 7 Feb. This is after the commodity completed its counter-trend rebound phase, which stalled slightly below the immediate resistance of MYR2,124, in the prior two sessions. Based on these observations, we keep to our negative trading bias.

As the bears have likely resumed control over the price trend, we continue to advise traders to stay in short positions. We initiated these at MYR2,084, the closing level of 30 May. To manage risks, a stop-loss can be placed above MYR2,124.

Towards the downside, immediate support set 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. This is followed by the MYR2,200 level.

Source: RHB Securities Research - 3 Jun 2019