Maintain short positions on the expectation of a downtrend resumption. The FCPO experienced a sharp intraday reversal. It generally slid lower throughout the session, from a high of MYR2,075 to a low of MYR2,023, before closing at MYR2,028, indicating a decline of MYR28. We continue to see the risk as high that the soft commodity is in the process of extending its weak price trend – which started from the high of MYR2,344 on 7 Feb. The fact that the commodity is still capped by the 200-day SMA line is also signalling a negative tone. As such, we keep to our negative trading bias.

Given that the bears are showing control over the price trend and the risk of the retesting of the MYR1,940 immediate support is high, traders should remain in short positions. We initiated these at MYR2,084, the closing level of 30 May. To manage risks, a stop-loss can be placed at the breakeven level.

The immediate support is set at MYR1,940, the low of 27 Nov 2018. Breaking this may see the market test the MYR1,900 threshold. On the other hand, 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 - 10 Jun 2019