Case for rebound extension invalidated; initiate short positions. The FCPO failed to stage a positive follow-up from the prior session’s “Long-Legged Doji”. At the closing, the soft commodity settled MYR66 lower at MYR2,246, crossing below the previous immediate support of MRY2,262. The weak session means our bias for its sideways trading pattern to be extended has been voided. This also indicates that the current retracement leg that resumed from the 9 Apr’s “Bearish Engulfing” formation is likely to be extended. Towards the downside, the commodity may retest its recent low of MYR2,186. As such, we switch our trading bias to negative.

Our previous long positions, initiated at MYR2,357, the closing level of 8 Apr were closed out at MYR2,262. As the commodity is unable to extend its sideways trading trend for now, we initiate short positions at the latest close. For risk management purposes, a stop-loss can be placed above MYR2,335.

We revised the immediate support to MYR2,222, the low of 6 Apr. This is followed by MYR2,186, the low of 17 Mar. Meanwhile, the immediate resistance is now set at MYR2,335, the high of 10 Apr, followed by MYR2,409 – the price point of 9 Apr

Source: RHB Securities Research - 14 Apr 2020