Maintain long positions, with a stop-loss set below the MYR2,685 support. The FCPO formed a black candle yesterday. It dropped MYR22 to close at MYR2,881 pts, after oscillating between a high of MYR2,930 and low of MYR2,870. Still, the bullish sentiment stays unchanged as this candle can only be viewed as buyers probably taking a breather after the recent surge. Since the commodity is still holding above the rising 21-day and 50-day SMA lines, this indicates that the upside move is not over yet. Overall, we believe the rebound that started off 15 Oct’s “Hammer” pattern would likely persist in the coming sessions.    

As seen in the chart, we are eyeing the immediate support level at MYR2,685, determined from the low of 2 Dec. The next support will likely be at MYR2,558, which was the low of 14 Nov. On the other hand, we anticipate the immediate resistance level at MYR2,986, situated at the high of 16 February 2017. Meanwhile, the next resistance is anticipated at MYR3,075, obtained from the high of 15 February 2017.    

Therefore, we advise traders to stay long, following our recommendation of initiating long positions above the MYR2,175 level on 9 Oct. At the same time, a stop-loss can be set below the MYR2,685 threshold to limit the risk per trade.

Source: RHB Securities Research - 12 Dec 2019