Maintain short positions as the bulls failed to deliver a follow-up. The FCPO’s rebound from the 200-day SMA line stalled in the latest session. At the closing, the commodity shed MYR26 to settle at MYR2,141 – the low and high were recorded at 2,134 and MYR2,168. The weak session means there is still no confirmation that the commodity’s retracement leg has reached an end. This ongoing correction resumed after the commodity failed in its second attempt to cross the MYR2,300 level on 7 Sep. Towards the upside, if the immediate resistance of MYR2,173 is breached, this could mark an end to the said correction phase. Until this happens, we make no change to our negative trading bias.

As the correction phase is still not showing prospects of reversing, we continue to recommend that traders stay in short positions. These were initiated at MYR2,245, the closing level of 19 Sep. To manage risks, a stop-loss can be placed at above MYR2,173, the high of 26 Sep.

Immediate support is set to emerge at MYR2,100, near the 200-day SMA line. This is followed by MYR2,000, a round figure. Meanwhile, the immediate resistance is pegged at MYR2,173, the high of 26 Sep. This is followed by MYR2,312, the high of 26 Aug.

Source: RHB Securities Research - 3 Oct 2019