Maintain short positions. Profit-taking on the FCPO continued, and the commodity shed MYR40.00 to close at MYR3,887 yesterday. It closed with a second long black candle in as many days. This implies that the bearish trend is still intact. The FCPO opened higher at MYR3,990, then tapped the day’s high of MYR4,009, before swiftly dropping to hit the low of MYR3,852. The commodity then settled near the bottom, at MYR3,887. The medium-term outlook still points to a positive momentum, premised on the commodity trading above the 50-day SMA line, coupled with the RSI still being above the 50% level. That said, the immediate term is still signaling the opposite, where “long black candles” for two consecutive days have emerged together with the RSI pointing downwards. This means further profit-taking activities may bring the commodity closer to its average line. As such, we stick to a negative trading bias.

We recommend that traders stay in short positions. We initiated short positions at the close of 23 Apr, ie MYR3,927. To manage risks, we set the stop-loss above the MYR4,084 resistance level.

The immediate support remains at MYR3,843, then MYR3,800. Towards the upside, the immediate resistance is fixed at the MYR4,084 level – the stop-loss level, followed by MYR4,192, or 15 Mar’s high.

Source: RHB Securities Research - 27 Apr 2021