Initiate short positions as it has hit the stop-loss point. The FCPO continued to trade in a volatile manner yesterday, between MYR2,611 and MYR2,703. It closed MYR71 lower at MYRMYR2,652. The closing level was also slightly below the support of MYR2,653 – which indicates that despite the emergence of the “Bullish Harami” formation in the prior session, there are still no positive signals to indicate that the commodity is ready to stage a rebound after the recent sharp declines sent the RSI into an oversold reading. As such, we switch our trading bias to negative.

Our previous long positions, initiated at MYR2,723, were closed out at the latest session. As the latest session invalidated the bias for a rebound to develop, we initiate short positions at the latest close. To manage risks, a stoploss can be placed above MYR2,753.

The immediate support is revised to MYR2,575, the low of 28 Jan’s “Bullish Harami”, this is followed by MYR2,500 – a round figure. Meanwhile, the immediate resistance is set at MYR2,753, followed by MYR2,810 – both levels being derived from 29 Jan’s candle.

Source: RHB Securities Research - 31 Jan 2020