Maintain long positions. The FCPO narrowed its latest session’s losses to MYR33.00, and closed at MYR3,305 yesterday. At one point, the soft commodity reached a low of MYR3,255. We believe the weak session was just the result of profit-taking activities, following last Friday’s sharp positive intraday price reversal. This is further supported by the fact that the commodity was able to settle significantly above the intraday low. All in, price actions are indicating that the overall technical picture is still positive. Also, the risk of a deeper retracement would be contained, as long as the latest low is not breached in the sessions ahead. Additionally, the RSI is showing early signs of reversing towards the upside – this points towards an improving momentum. We maintain a positive trading bias.

We recommend that traders stay in long positions. We initiated these at MYR3,338 – the closing level of 27 Nov. To manage risks, a stop-loss can now be set below the MYR3,255 mark.

The immediate support is revised to MYR3,255 – a price point of the latest session, followed by MYR3,182 – the low of 23 Nov. On the upside, immediate resistance is set at MYR3,340 – derived from the 27 Nov’s high. This is followed by MYR3,400.

Source: RHB Securities Research - 7 Dec 2020