Initiate long positions as the correction phase may have ended. The FCPO formed a white candle to close MYR15 higher at MYR2,175 yesterday, after breaching above the previous immediate resistance of MYR2,173. Trading ranged between the MYR2,158 and MYR2,177 levels. The upside breach of the said previous immediate resistance indicates that the commodity’s rebound from the 200-day SMA line is extending. This could also mark the end of the commodity’s correction phase, which resumed on the failed attempt to cross above the MYR2,300 level on 13 Sep. This positive bias could be further enhanced, should the RSI resistance line (as drawn on the chart) be breached. We switch our trading bias from negative to positive.

Our previous short positions, initiated at MYR2,245, the closing level of 19 Sep, were closed out at MYR2,173 in the latest session. On the anticipation that the correction is done, we initiate long positions at the latest closing level. To manage risks, a stop-loss can be placed below MYR2,100.

The immediate support target remains at MYR2,100, near the 200-day SMA line. This is followed by MYR2,000. Moving up, the immediate resistance is now pegged at MYR2,312, the high of 26 Aug, followed by MYR2,344, the high of 7 Feb.

Source: RHB Securities Research - 9 Oct 2019