Maintain short positions as the downside risks are still high. The FCPO closed MYR34 lower at MYR1,994 yesterday, with the day’s high and low at MYR2,031 and MYR1,991. The commodity’s weak bias that started from the high of MYR2,344 on 7 Feb is still showing strong signs of extending. This came after it recently completed its countertrend rebound, which stalled near the immediate resistance of MYR2,124. Based on its current price trajectory, we believe risks should be high, as the commodity could retest the immediate support of MYR1,940. We maintain our negative trading bias.

As the negative trend is still extending and in the absence of price reversal signals, 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.

Towards the downside, immediate support is 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 - 11 Jun 2019