Maintain short positions, as there is still no sign of a stronger rebound. The FCPO closed MYR55 higher yesterday, at MYR2,668. The low and high were at MYR2,626 and MYR2,697. The daily chart still does not indicate that the commodity’s retracement has ended - the recent sessions’ price actions are merely suggesting bears are taking a pause. This implies that the 29 Jan’s “Bullish Harami” formation is still unconfirmed. Until there are further positive price actions, we are keeping to our negative trading bias.

In the absence of strong evidence to indicate the bottom has been reached, traders should stick to short positions. We initiated these at MYR2,652, the closing level of 30 Jan. To manage risks, a stop-loss can be placed above MYR2,753.

The immediate support is revised to MYR2,626, the latest session’s low. This is followed by MYR2,575, the low of 28 Jan’s “Bullish Harami”. Conversely, the immediate resistance is now pegged at MYR2,700, a round figure. This is followed by MYR2,753, derived from 29 Jan’s candle.

Source: RHB Securities Research - 5 Feb 2020