Maintain long positions. The FCPO formed a black candle to end the latest trade MYR71 weaker at MYR2,918 – the low was recorded at MYR2,910. In terms of price actions, the latest performance was a negative surprise to us as the commodity has nullified our expectations for it to extend its narrow sideway range of between MYR2,900 and MYR2,975, which was defined in the prior two sessions. This, in essence, has changed the nature of the consolidation phase from a sideways range to a deeper retracement. Should the MYR2,900 support fail in the coming sessions, this would open the door to a deeper retracement phase to develop. For now, we are keeping our positive trading bias.

We recommend that traders stick to long positions. We initiated these at MYR2,818, the closing level of 6 Oct. To manage risks, a stop-loss can be placed below MYR2,900.

The immediate support is revised to MYR2,900, followed by MYR2,850. On the upside, the immediate resistance is now eyed at MYR2,960, followed by the round figure of MYR3,000.

Source: RHB Securities Research - 16 Oct 2020