Initiate long positions. After making several attempts over the past weeks, the FCPO finally formed a strong candle to pierce trough the MYR3,470 resistance, thus marking an end to its relatively narrow sideways multi-week sideways consolidation phase. At the closing, the soft commodity recorded a gain of MYR123 to close at MYR3,535 – the high was posted at MYR3,544. The breakout has nullified our previous expectation for the commodity to trade in an extended correction phase which we initially forecasted price to reach MYR3,150 to MYR3,200 zone. Overall, the commodity’s multi-month is still showing good signs of extending, further supported by the observation that prices continue to hold firmly above both the 50- and 200-day SMA lines, both are curving upward. Hence, we switch our trading bias from negative to positive.

Our previous short positions initiated at MYR3,366 – the closing level of 8 Dec were closed out in the latest session at above MYR3,470. Concurrently, we initiate long positions. To manage risks, a stop-loss can be placed below MYR3,450.

The immediate support level is revised to MYR3,470, followed by MYR3,450. Meanwhile, the immediate resistance is now pegged at MYR3,550, followed by the MYR3,600 round figure.

Source: RHB Securities Research - 29 Dec 2020