Maintain long positions until a reversal is confirmed. The FCPO closed MYR39.00 lower at MYR2,349 yesterday, after it came close to matching the prior session’s high of MYR2,422. The latest performance is in line with our observation that the commodity’s 4-week rebound is losing steam. This happened near the resistance zone of MYR2,409 and MYR2,460. At this juncture, we still believe the risk of a deeper correction developing will still be capped, as long as the MYR2,330 support is not breached southwards. As such, we maintain our positive trading bias.

In the absence of a clear price reversal signal, we advise traders to stay in long positions. We initiated these at MYR2,032, the closing level of 13 May. To manage risks, a stop-loss can be placed below MYR2,330.

The immediate support is set at MYR2,330 – near the low of 9 Jun. This is followed by MYR2,300. Moving up, the immediate resistance is now set at MYR2,409 – the high of 9 Apr’s “Bearish Engulfing” pattern. This is followed by MYR2,460, near the 200-day SMA line.

Source: RHB Securities Research - 16 Jun 2020