Maintain long positions. The FCPO extended the rally further on Wednesday, jumping MYR122.00 to settle at MYR3,877. The commodity had a strong opening, gapping MYR30.00 to open at MYR3,785. The commodity briefly traded at the day’s low of MYR3,774, and rallied to the day’s high of MYR3,888, breaching the previous psychological resistance of MYR3,800. It last traded at MYR3,875, closing higher for the sixth consecutive session. Based on the last 10 trading sessions, we estimate the average trading range ATR to be MYR57.00. If we are projecting 2x ATR from latest settlement price of MYR3,877, we may see upside resistance at MYR3,991 while downside support would be at MYR3,763. Meanwhile, 1x ATR from MYR3,877 will see the nearest resistance at MYR3,934 and the nearest support at MYR3,820. With the RSI moving into the overbought level of 80%, the bulls may be inclined to trim positions or take profit, and it would not be surprising to see a minor retracement in the coming sessions. As long as the downside support or trailing-stop remains intact, we maintain a positive trading bias.

We recommend that traders stick to long positions. Our long positions were initiated at MYR3,535, or the closing level of 23 Dec. To manage risks, a trailing-stop can be set below the MYR3,763 mark.

The immediate support is marked at MYR3,820, followed by MYR3,763. Meanwhile, the immediate resistance is now pegged at MYR3,934, followed by higher hurdle at MYR3,991.

Source: RHB Securities Research - 7 Jan 2021