Maintain short positions, on the expectation that the retracement may resume. The FCPO continued to extend its rebound for a third consecutive session, which was stronger than our initial expectation. It closed MYR54.00 stronger at MYR2,731, off the high of MYR2,763. Based on the commodity’s inability to hold on to a good part of its intraday gains, we believe chances are high that the counter-trend rebound has likely ended – and the risk of a retracement is also elevated. As such, we make no change to our negative trading bias.

We advise traders to stay in short positions. We initiated these at MYR2,672 – the closing level of 27 Jul. To manage risks, a stop-loss can now be set above MYR2,790.

We now expect the immediate support to emerge at MYR2,700, followed by MYR2,670 – the price point 30 Jul. Meanwhile, the immediate resistance is at MYR2,763, ie the latest high. This is followed by MYR2,790, which is derived from 24 Jul’s high.

Source: RHB Securities Research - 4 Aug 2020