Initiate long positions. The FCPO rebounded much stronger than what we had anticipated as it almost filled the previous session’s “Downside Gap”. The commodity generally moved higher for the session, hitting a high of MYR3,379, before profit-taking activities in the final 15 minutes narrowed the gains to MYR91 to close at MYR3,317. The strong session defies our expectation for a much milder pause to develop following the commodity’s previous two session’s sharp declines. With the upside breach of MYR3,300, there is a possibility for the counter-trend rebound that has been developing over the past two weeks to extend. This bias would remain provided the MYR3,250 support is not breached. We switch our trading bias from negative to positive.

Our previous short positions initiated at MYR3,226 – the closing level of 3 Feb – were closed out at MYR3,300 in the latest session. Concurrently, we initiate long positions. A stop-loss can be placed below MYR3,250.

Support levels are adjusted to MYR3,270 and MYR3,210 – being 3 Feb’s low. Moving up, the immediate resistance is set at MYR3,340, followed by MYR3,379 – both are derived from the latest candle.

Source: RHB Securities Research - 5 Feb 2021