Stop loss triggered; initiate short positions. The FCPO plunged MYR171.00 to settle at MYR3,692 last Friday. Initially, the commodity gapped southwards by MYR123.00 to open at MYR3,740. After briefly touching the day’s high of MYR3,761, it then dived to the day’s low of MYR3,664, before bouncing back slightly to close at MYR3,692. This strong negative price action firmly confirmed the change of direction towards the south. The RSI indicator is falling below the threshold of 50%, indicating bearish momentum ahead. As long as it remains below MYR3,826 pts, the strong downward momentum will persist and may see the commodity testing the 50-day SMA line. Since it is reverting to a downtrend, this – together with the negative momentum – compels us to shift to a negative trading bias.

We closed out the long positions that were initiated at MYR3,930 or the closing level of 23 Mar. Conversely, we initiate short positions at 26 Mar’s closing level. To manage risks, a stop-loss is set at 25 Mar’s low of MYR3,826.

The immediate support is revised to MYR3,650, followed by 23 Feb’s low of MYR3,576. Towards the upside, the immediate resistance level is revised to MYR3,800, followed by 25 Mar’s closing price of MYR3,863.

Source: RHB Securities Research - 29 Mar 2021