Initiate short positions as the correction is deeper than expected. The FCPO closed MYR47.00 weaker, at MYR2,615 – falling below the previous immediate support of MYR2,650. This breach invalidates our previous thesis that the commodity was trading in a sideways range of MYR2,650-2,750. This also suggests a deeper retracement is likely developing. As such, we switch our trading bias from positive to negative.

Our previous long positions – initiated at MYR2,711, the close of 18 Aug – were closed out at MYR2,650 in the latest session. As the correction is deeper than expected, we initiate short positions at the latest close. To manage risks, a stop-loss can be set above MYR2,700.

The immediate support is revised to MYR2,600, followed by MYR2,562 – the low of 28 Jul. Meanwhile, the immediate resistance is set at MYR2,685, followed by MYR2,700.

Source: RHB Securities Research - 26 Aug 2020