Maintain short positions as the bears are in control. The FCPO settled marginally below the 50-day SMA line in the latest session. During the intraday, it reached a low of MYR2,816, before closing at MYR2,837, indicating a decline of MYR49. The negative session invalidated the prior session’s “Inverted Hammer” formation, thereby suggesting there is still no signal that the commodity’s recent sharp retracement has reached an interim low. All in, we still believe the commodity is still in the early stages of developing a correction phase, to correct its previous multi-month uptrend that peaked at MYR3,150. We maintain our negative trading bias.

As the bears are still in firm control, traders should stay in short positions. We initiated these at MYR3,005, the closing level of 14 Jan. To manage risks, a stop-loss can be placed above MYR3,150.

Immediate support is eyed at MYR2,806, the low of 18 Dec, followed by the MYR2,700 mark. Meanwhile, 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 - 20 Jan 2020