Initiate short positions. The FCPO failed to follow up from the prior session’s positive intraday price reversal, ending MYR42 weaker at MYR2,329, and slightly below the previous immediate support of MYR2,330. While the downside breach is not decisive, it has nevertheless triggered the price signal that the commodity is likely in a correction phase. This implies that its 5-week rebound has likely reached an interim top at MYR2,422. Towards the downside, we are expecting the retracement to retest the 50-day SMA line. We switch our trading bias to negative.

Our previous long positons initiated at MYR2,032, the closing level of 13 May, were closed out at MYR2,330. As the downside risk has heightened, we initiate short positions at the latest closing level. To manage risk, a stop-loss can be placed above MYR2,422.

We revised the immediate support to MYR2,260. This is followed by MYR2,200 – near the 50-day SMA line. Moving up, the immediate resistance is set at MYR2,370 – price point of the latest session. This is followed by MYR2,422 – the high of 9 Jun.

Source: RHB Securities Research - 22 Jun 2020