Stay long while setting a new trailing-stop below the MYR2,008 level. After posting four white candles in a row, the FCPO ended lower to form a black candle on Monday. It dropped MYR6 to close at MYR2,061, after hovering between a high of MYR2,075 and low of MYR2,052. However, on a technical basis, the aforementioned black candle can only be viewed as a weak pullback after the recent surge. We think the bulls may continue to control the market, given that the commodity did not negate the bullishness of 24 Jul’s upside gap. Overall, we keep our bullish view on the FCPO’s outlook.

As seen in the chart, we are now eyeing the immediate support level at MYR2,008, situated near 24 Jul’s upside gap support. If a breakdown occurs, the next support is seen at MYR1,916, determined from the previous low of 10 Jul. Towards the upside, the immediate resistance level is anticipated at MYR2,115, ie the high of 29 May. Meanwhile, the next resistance is maintained at MYR2,156, which was the downside gap resistance of 26 Apr.

Hence, we advise traders to maintain long positions, given that we initially recommended initiating long above the MYR2,029 level on 25 Jul. For now, a new trailing-stop is advisable to set below the MYR2,008 threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 31 Jul 2019