Initiate long positions on a possible counter-trend rebound play. The FCPO closed on a positive note yesterday, climbing MYR38 to close at MYR2,032. The close also crossed above the MYR2,005 mark, which indicates that the commodity is likely developing a counter-trend rebound, following the recent weeks’ retracement. Additionally, the RSI crossing above the resistance line (as drawn in the chart) suggests that the momentum is picking up. We advocate that investors switch their trading bias to positive.

Our previous short positions – initiated at MYR2,246, the close of 13 Apr – were closed out at MYR2,005 in the latest session. As a rebound could be developing, we initiate long positions at the latest close. To manage risks, a stop-loss can be placed below MYR1,980.

The immediate support is revised to MYR1,980 – derived from the latest candle. This is followed by MYR1,939, the low of 6 May. On the other hand, the immediate resistance is now pegged at MYR2,095 – the high of 30 Apr, followed by MYR2,125 – the high of 23 Apr.

Source: RHB Securities Research - 14 May 2020