Maintain short positions. The FCPO bounced off the support level of MYR3,200, rising MYR24.00 to settle at MYR3,266. The commodity gapped MYR36.00 higher to open at MYR3,278. After testing the day’s high at MYR3,292, selling pressure emerged throughout most of the session, dragging the commodity towards the day’s low of MYR3,196. Bargain hunting by the bulls near the day’s low saw the commodity rebound higher to record its last trade at MYR3,265. This became the second occasion the support level of MYR3,200 was tested in the past five sessions. If this support level gives way in the coming sessions, we expect to see a deeper correction. Meanwhile, if the commodity is able to establish an interim base and move above the resistance of MYR3,335, this indicates the end of the correction phase. Until the trailing stop or immediate resistance is breached, we maintain a negative trading bias.

We recommend that traders keep their short positions. Our short positions were initiated at MYR3,695, or the closing level of 12 Jan. To manage risks, a trailing-stop is set at the MYR3,335 mark.

The immediate support is marked at MYR3,200 followed by the next support at MYR3,132. Towards the upside, the immediate resistance is pegged at MYR3,335, followed by the next hurdle of MYR3,423.

Source: RHB Securities Research - 27 Jan 2021