Trailing-stop triggers; initiate short positions. The FCPO saw a Breakaway Gap yesterday, declining MYR44.00 to settle at MYR3,642. In the morning, the commodity gapped MYR58.00 lower to start the session at MYR3,626. It traded narrowly between the day’s high of MYR3,659 and day’s low of MYR3,598 before closing at MYR3,642. A Breakaway Gap is an indication that the prior trend is ending and a new trend is forming. Coupled with the Bearish Engulfing pattern formed previously, we think the commodity is trading at an inflection point. Unless the commodity fills the gap in a short span of time, the negative momentum may follow through in the coming sessions. Since the trailingstop is breached, we are shifting over to a negative trading bias.

We closed out the long positions, which were initiated at MYR3,317 or the closing level of 4 Feb, after triggering the trailing-stop at MYR3,640. Conversely, we initiate short positions at the closing level of 2 Mar. To manage risks, a stoploss can be placed above 1 Mar’s high of MYR3,819.

The nearest support level is revised to 23 Feb’s low of MYR3,576, followed by the physcological level of MYR3,500. Towards the upside, the immediate resistance is now pegged at the round figure of MYR3,700 and followed by the higher hurdle of MYR3,819.

Source: RHB Securities Research - 3 Mar 2021