Maintain long positions in the absence of a signal for a correction. The FCPO added MYR30 to close at MYR2,875, this was after it hit a low and high of MYR2,851 and MYR2,885. The positive session means there was no negative follow-up from the prior negative session, which had set in after the commodity’s multi-week upward move reached an overbought condition. This means, based on the daily chart, the commodity’s upward move is still firmly in place. Towards the downside, we are now of the view that provided the previous session’s low of MYR2,850 has not breached towards the downside, the risk for a correction phase to develop would still be contained. Maintain our positive trading bias.

As we are not seeing confirmation for a correction phase to develop, traders should remain in long positions. These were initiated at MYR2,175, the closing level of 9 Oct. To manage risks, a stop-loss can now be placed below MYR2,850.

We revised the immediate support to MYR2,850, the low of 13 Dec. This is followed by MYR2,685, the low of 2 Dec, Towards the upside, the immediate resistance is pegged at MYR2,986, the high of 16 February 2017. This is to be followed by MYR3,075, the high of 15 February 2017.

Source: RHB Securities Research - 17 Dec 2019