Maintain short positions. The FCPO saw some profit-taking activity yesterday. Since the third month of the futures contract is in Feb 2021, the commodity started the session flat, at MYR3,299. The commodity tried to rise higher, but bulls took profit near the day’s high of MYR3,328. For every rebound move, the highs were getting lower, indicating that the bulls were exiting their positions while the bears grew stronger. Towards the last 30 minutes of trading, the commodity fell to the day’s low of MYR3,278 and settled at MYR3,283. In the bigger picture, the 50-day SMA line was still pointing higher, suggesting that the FCPO was still in a bullish cycle. However, the RSI indicator is pointing south now, indicating that it has also entered into a short-term correction. As long as the immediate overhead resistance is maintained, we will stick to a negative trading bias.

We recommend that traders switch to short positions. We initiated these at MYR3,380, the closing level of 13 Nov. To manage risks, we revise our stop-loss to above MYR3,350.

The immediate support is marked at MYR3,234, followed by the low of 10 Nov, which is MYR3,193. Towards the upside, the immediate resistance is pegged at MYR3,337, the low of 13 Nov, followed by MYR3,380.

Source: RHB Securities Research - 23 Nov 2020