Maintain short positions. The FCPO tested the MYR3,340-MYR3,300 support zone with an intraday low of MYR3,324. This was before a sharp rebound kicked in, sending the commodity to a high of MYR3,420, before closing MYR13 higher at MYR3,378. Despite the strong reaction from the abovementioned support zone, the latest performance did not flash out a trend reversal signal, more so as its rebound stalled at the MYR3,420 immediate resistance. All in, the recent “Double Top” formation has likely marked an interim top for the commodity’s multi-month uptrend, and that it is now trading in a correction phase. At the minimum, we are expecting prices to retrace towards the MYR3,150 to 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 MYR3,340-MYR3,300 support zone remains. Meanwhile, the immediate resistance is also maintained at MYR3,420, followed by MYR3,470.

Source: RHB Securities Research - 23 Dec 2020