Maintain short positions. After registering its ninth consecutive loss, the FCPO rebounded MYR63.00 to settle at MYR3,284. Yesterday, it gapped MYR46.00 higher to open at MYR3,267. The commodity then bounced between the narrow range of the day’s high of MYR3,303 and the day’s low of MYR3,246 before settling at MYR3,284. Based on last 10 sessions, the average trading range (ATR) narrowed to MYR69 from MYR80. Since volatility is tapering, the commodity may have reached an interim low near MYR3,168. Meanwhile, the commodity is eyeing to cross above the immediate resistance of MYR3,350. If it manages to cross the immediate resistance, we think sentiment will tilt towards optimism and launch a counter trend rebound. Nonetheless, the RSI is trending below 50 indicating bearish sentiment is looming. As long as the trailing stop remains intact, we stick to our negative trading bias.

We recommend that traders maintain short positions. Our short positions were initiated at MYR3,695, or the closing level of 12 Jan. To manage risks, a trailing-stop can be set at MYR3,350 mark.

The immediate support is unchanged at MYR3,200, followed by MYR3,168. Towards the upside, the immediate resistance is pegged at MYR3,350, followed by the next hurdle of MYR3,423.

Source: RHB Securities Research - 22 Jan 2021