Positive sentiment remains intact; stay long. The FCPO ended higher to form a white candle yesterday. It gained MYR9 to close at MYR2,887, off its high of MYR2,908 and low of MYR2,867. From a technical perspective, we expect the rebound that began from 15 Oct’s “Hammer” pattern to likely continue. This is because the FCPO has stayed above the rising 21-day and 50-day SMA lines for nearly two months, implying that the market sentiment is bullish. Overall, we keep our bullish view on the FCPO’s outlook.

Based on the daily chart, the immediate support level is at MYR2,685, ie the low of 2 Dec. The next support is anticipated at MYR2,558, determined from the low of 14 Nov. Towards the upside, we are eyeing the immediate resistance level at MYR2,986, the high of 16 February 2017. If this level is taken out, look to MYR3,075 – defined from the high of 15 February 2017 – as the resistance.

Premised on this, we advise traders to maintain long positions, given that we initially recommended initiating long above the MYR2,175 level on 9 Oct. A stop-loss set below the MYR2,685 threshold is advisable in order to minimise the downside risk.

Source: RHB Securities Research - 13 Dec 2019