Maintain short positions. The FCPO rolled over its contracts yesterday. At the intra-day, the soft commodity failed to sustain its earlier session’s strong showing when the price rose to a high of MYR3,414, before weakening to end the day at MYR3,365. The closing level put the commodity below the previous immediate support of MYR3,422. Despite the negative contracts rollover effect, we still see this as a valid confirmation that the commodity has a possible “Double Top” formation, with the high posted at MYR3,470. This implies the commodity is likely to weaken in the coming sessions. We expect the price to retrace towards the MYR3,150-3,200 area, and maintain a negative trading bias.'

We recommend that traders stay in short positions, initiated at MYR3,366 – the closing level of 8 Dec. To manage risks, a stop-loss can be placed above MYR3,470.

Support levels are expected to emerge at MYR3,340 and MYR3,300. On the upside, the immediate resistance is revised to MYR3,420, followed by MYR3,470.

Source: RHB Securities Research - 22 Dec 2020