Maintain short positions in the absence of a rebound. The FCPO failed to sustain its intraday gains, and closed MYR3 lower at MYR2,232 – with the high posted at MYR2,273. The negative price performance means there was no positive follow-up from the prior session’s intraday rebound, after the immediate support of MYR2,186 was tested. This implies the commodity’s retracement leg resumed after the 9 Apr’s “Bearish Engulfing” formation was deemed as still being in place. Based on the latest technical picture, towards the upside, we now believe an upside breach of MYR2,303 would likely to signal a rebound is taking place. Until this happens, we keep to our negative trading bias.

With no clear price reversal signal, we recommend that traders stick to short positions, We initiated these at MYR2,246, the close of 13 Apr. To manage risks, a stop-loss can now be placed above MYR2,303.

The immediate support remains at MYR2,186, the low of 17 Mar. This is followed by MYR2,150. Meanwhile, the immediate resistance is now at MYR2,303, the high of 15 Apr, followed by MYR2,409 – the high of 9 Apr’s “Bearish Engulfing” formation.

Source: RHB Securities Research - 21 Apr 2020