Maintain short positions. The FCPO experienced a relatively strong intraday rebound in the latest session to re-cross above the 50-day SMA line. After reaching a low of MYR2,764, the soft commodity rebounded to hit a high of MYR2,863, before finally settling MYR2,858, up RM82. Should there be a positive price follow-through in the coming sessions, this would likely signal that the commodity’s one-week sharp price correction has reached an end, and indicate a good possibility of it resuming its upward move. Pending this, we are keeping our negative trading bias.

We recommend traders to stay in short positions. We initiated these at MYR2,870, which is the closing level of 16 Oct. To manage risks, a stop-loss can now be placed at the breakeven level.

We revise the support level to MYR2,820, followed by MYR2,764 – both are the latest session’s price points. On the upside, the resistance points are eyed at MYR2,870, followed by the round figure of MYR2,900.

Source: RHB Securities Research - 21 Oct 2020