Initiate short positions on a possible retracement phase setting in. The FCPO marked an end to its recent sessions’ positive streak with a price reversal “Bearish Engulfing” formation. For the session, it reached a high of MYR3,104 to test the MYR3,100 resistance, before sliding lower to close MYR73 weaker at MYR3,007. The sharp intraday negative price reversal, which came after the RSI flashed out an overbought reading, is likely signalling the commodity’s entry into a correction phase. Towards the downside, the risk is high for the commodity to re-test the MYR2,800 area. Premised on this, we switch our trading bias from positive to negative.

Our previous long positions initiated at MYR2,738, the closing level of 28 Aug, were closed out at MYR3,030 yesterday. Concurrently, we initiate short positions. To manage risks, a stop-loss can be placed above MYR3,100.

The immediate support is revised to MYR2,964, the low of 17 Sep. This is followed by MYR2,900. Meanwhile, the immediate resistance is set at MYR3,040 – the price point of the latest session, followed by MYR3,100.

Source: RHB Securities Research - 22 Sept 2020