Pending confirmation for a reversal; maintain short positions. The FCPO experienced a sharp positive intraday price reversal to close the latest session MYR65 stronger at MYR2,822. Earlier it hit a low of MYR2,725 to test the 50- day SMA line. The positive price reaction came following the commodity’s recent sessions’ sharp retracement which saw prices retrace by about MYR380. This could mean the retracement that started from the 21 Sep’s “Bearish Engulfing” formation has reached an interim low and that, at the minimum, the soft commodity may be ready to stage a counter-trend rebound that could last for a few sessions. To confirm this possibility, the commodity has to settle above the MYR2,825 mark. Pending this, we are keeping our negative trading bias.

We recommend traders to stay in short positions. We initiated these at MYR3,007, the closing level of 21 Sep. To manage risks, a stop-loss can be placed at above MYR2,825

The immediate support is revised to MYR2,790 – the price point of the latest session, this is followed by MYR2,735 – near the 50-day SMA line. Conversely, the immediate resistance is set at MYR2,825, followed by MYR2,850.

Source: RHB Securities Research - 28 Sept 2020