Maintain short positions. For the second consecutive session, the FCPO attempted a breakout from the multi-year high and immediate resistance level of MYR3,470, with an intraday high of MYR3,469. This was before it was rejected from the said resistance, to end the day MYR10 softer at MYR3,446. The failure of the commodity to perform a breakout continues to see it trading within the correction structure that has been developing over the past two weeks. Towards the downside, should the MYR3,422 support be breached in the coming sessions, this would likely confirm a “Double Top” formation, thus opening the door to further price weakness. Broadly, the risk is still tilted towards the downside for the commodity to test the MYR3,150-MYR3,200 zone. Maintain our 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.

The immediate support is revised to MYR3,422, followed by MYR3,395. Towards the upside, the immediate resistance is envisaged to emerge at MYR3,470, followed by MYR3,500.

Source: RHB Securities Research - 21 Dec 2020