Maintain short positions as support levels give way. The FCPO ended the latest trade on a weak tone, shedding MYR63 to end at MYR2,714 – marginally breaching the previous support level of MYR2,725. The 50-day and the multimonth uptrend lines that stretched from the low in May were also breached. These, in our view, suggest the commodity’s retracement leg that started from the 21 Sep’s “Bearish Engulfing” formation is extending, after staging a brief rebound on 25 and 28 Sep. This negative bias is further supported by the RSI, which crossed below its support level. Hence, we are keeping our negative trading bias.

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

The immediate support is revised to MYR2,700 round figure and MYR2,670. Conversely, the immediate resistance is now eyed at MYR2,745, this is followed by MYR2,780.

Source: RHB Securities Research - 1 Oct 2020