Maintain short positions while tightening up risk management. The FCPO failed to sustain Thursday’s sharp rebound as it ended the Friday session MYR81 weaker at MYR2,708, after testing the MRY2,700 support with a low of MYR2,691. The negative performance again placed the soft commodity below the 50-day SMA and multi-month uptrend lines. While the latest low is not significantly lower than the lows of 25 Sep (MYR2,725) and 30 Sep (MYR2,708), which can be seen as a weakening of price momentum, positive price actions are needed to confirm a trend reversal. Until the commodity is able to close above the MYR2,770 resistance, 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 MYR2,770.

The immediate support is revised to the round figure of MYR2,700, follow by MYR2,670. Towards the upside, the immediate resistance is revised to MYR2,730 – a price point of the latest session, this is followed by MYR2,770.

Source: RHB Securities Research - 5 Oct 2020