Maintain short positions. The FCPO saw a huge sell-off on Thursday, plunging MYR165.00 to settle at MYR3,527. The commodity started with a negative opening, gapping MYR46.00 lower to start at MYR3,646. After briefly testing the day’s high of MYR3,654, the bulls shied away from the market, and sparked the sell-off towards the day’s low of MYR3,490. Before the session closed, it recouped some losses and last traded at MYR3,530. Based on the latest price action, it rebounded off the current support level of MYR3,524. Meanwhile, the average trading range (ATR) of the last 10 sessions rose to MYR70.00. If we projecting 1x ATR from the latest close of MYR3,527, we may estimate the lower support at MYR3,457. With the RSI trending below 50%, it is very unlikely the commodity will rebound towards the resistance by the end of 15 Jan’s session. Note that the third-month futures contract will shift over to the Apr 2021 contract this Monday. Underpinning bearish sentiment, we maintain a negative trading bias.

We recommend that traders remain in short positions. Our short positions were initiated at MYR3,695, or the closing level of 12 Jan. To manage risks, a stop-loss can be set above the MYR3,740 mark.

The immediate support is marked at MYR3,524, followed by MYR3,457. On the upside, the immediate resistance is pegged at MYR3,740 – this is followed by a higher resistance of MYR3,800.

Source: RHB Securities Research - 15 Jan 2021