Correction phase has not completed yet; maintain short positions. The FCPO managed to reverse from its earlier session’s weak bias to settle MYR31 higher at MYR2,208. Trading took place in the range of MYR2,160 and MYR2,210. While the commodity has managed to end the latest two sessions positively, we are seeing a high probability that it is still trading in a correction phase – this means we are not expecting the MYR2,235 immediate resistance to be crossed in the coming sessions. This correction phase was triggered after the commodity experienced an overbought upward move recently. Maintain our negative trading bias.

On the bias that the said correction phase has not completed yet, we continue to recommend traders to stay in short positions. We initiated these at MYR2,156, which was the closing level of 19 Aug. For risk management purposes, a stop-loss can be placed above the MYR2,235 level.

We are keeping the immediate support target at MYR2,100, near the 200-day SMA line. This is followed by MYR2,049, the low of 31 Jul. Conversely, the immediate resistance is set at MYR2,235, the high of 5 Apr. This is followed by MYR2,344, the high of 7 Feb.

Source: RHB Securities Research - 22 Aug 2019