Maintain short positions as the bulls are still being pressured. The FCPO failed to sustain its intraday gains yesterday, hitting a high of MYR2,012, before sliding downwards to close at MYR1,975. The intraday negative price reversal indicates that the bulls still lack the strength to reverse the commodity’s downtrend, which has been extending after the 200-day SMA line was breached in March. While the RSI reading is nearing the oversold threshold, price actions do not indicate a downtrend price exhaustion. Towards the upside, we are now seeing a firm upside breach of MYR2,025 as a possible positive price signal to mark an end for the commodity’s retracement. Until this happens, we are maintaining our negative trading bias.

We recommend that investors 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 MYRY2,025.

The immediate support is maintained at MYR1,950, followed by MYR1,918, the low of 10 Jul 2019. Conversely, the resistance points are pegged at MYR2,025 – the price point of its latest session. This is followed by MYR2,095, the high of 30 Apr.

Source: RHB Securities Research - 6 May 2020