Maintain short positions as the bias is still bearish. The FCPO reached a low of MYR2,609 – this was before it rebounded to close at MYR2,639 – indicating a decline of MYR10. As prices are slightly below the 100-day SMA line, we do not regard it as a valid breach as yet. A firm breach of the said SMA line could open the door for more downside risks.

As the current round of retracement resumed after the commodity failed to cross above the 50-day SMA line recently, we are keeping our negative trading bias. As the risk for the 100-day SMA line to be breached decisively is still high, we recommend that traders remain in short positions. We initiated these at MYR2,695, the closing level of 11 Feb. To manage risks, a stop-loss can be placed at the breakeven level.

The immediate support target is expected at MYR2,575, the low of 28 Jan. This is followed by MYR2,500. Moving up, the immediate resistance is expected to emerge at MYR2,655. Breaking this may see market test the MYR2,700 round figure.

Source: RHB Securities Research - 19 Feb 2020