Initiate long positions. The FCPO kick-started yesterday’s session with an “Upside Gap”. At one point, it reached a high of MYR2,938, before giving back part of the gains to close MYR30.00 stronger at MYR2,888. The performance can be seen as a positive follow-through to the prior session’s strong rebound, which saw the soft commodity regaining above the 50-day SMA line. As such, chances are high that its 1-week sharp correction phase has likely reached an end, and the commodity may be resuming its multi-month uptrend. As such, we switch our trading bias to positive.

Our previous short positions were initiated at MYR2,870, the closing level of 16 Oct. These were closed out in the latest session. Concurrently, we initiate long positions. To manage risks, a stop-loss can be placed below MYR2,820.

We revise the support level to MYR2,850, followed by MYR2,820. Conversely, the immediate resistance is revised to MYR2,920, followed by MYR2,940.

Source: RHB Securities Research - 22 Oct 2020