Maintain short positions as the correction phase is developing. The FCPO failed to hold on to its earlier session’s positive tone, as it generally trended lower for the entire session. The high and low were registered at MYR3,038 and MYR2,943, before ending MYR60 weaker at MYR2,945. We believe the commodity is still in the early stages of a correction phase, which is meant to correct its previous multi-month’s sharp upward move. This correction phase started after the FCPO failed to cross above the MYR3,150 immediate resistance recently. Hence, we are keeping our negative trading bias.

As the bears are asserting control over the price trend, we continue to advise traders to stay in short positions. We initiated these at MYR3,005, the closing level of 14 Jan. To manage risks, a stop-loss can now be placed above MYR3,150.

The immediate support is expected to emerge at MYR2,806, the low of 18 Dec. This is followed by MYR2,700. Conversely, the immediate resistance level is set at MYR3,150, the high of 9 Jan. This is followed by MYR3,202, the high of 19 Dec 2016.

Source: RHB Securities Research - 16 Jan 2020