Maintain long positions. The FCPO ended its recent winning streak yesterday, shedding MYR23.00 to close at MYR2,159. Consequently a “Bearish Engulfing” formation appeared. The negative session came after the commodity tested the immediate resistance of MYR2,186 in the prior session. The price decline is not sufficient to indicate that the rebound, which started from the low of MYR1,939 on 6 May, has reached its top. Instead, we regard this as a possible minor pause. Towards the upside, it is still highly possible that the 50-day SMA line will be tested. We maintain our positive trading bias.

Without a signal indicating that the rebound has reached its top, we advise traders to stay in long positions. We initiated these positions at MYR2,032, the closing level of 13 May. To manage risks, a stop-loss can now be placed below MYR2,080

The immediate support is maintained at MYR2,140, the latest low. This is followed by the MYR2,100 round figure. Moving up, the immediate resistance is at MYR2,186 – the high of 21 Apr. This is followed by MYR2,220, near the 50- day SMA line.

Source: RHB Securities Research - 27 May 2020