Trailing-stop triggered; initiate short positions. Following the bearish “Dark Cloud Cover” pattern that formed near the MYR3,900 resistance level, the FCPO failed to retain its MYR3,800 level, falling MYR56 to settle at MYR3,795. Yesterday, it gapped down to start the session weaker at MYR3,781. After testing the intraday high at MYR3,838, it turned lower to touch the intraday low at MYR3,711. Mild buying interest near the day’s low saw the commodity rebound slightly to close at MYR3,795. As mentioned in the previous note, falling below the MYR3,800 threshold may see a follow through of negative momentum. Unless the commodity is able to set a foothold above the MYR3,711 support level, or stage a rebound above the resistance level to negate the bearish reversal pattern, the bearish sentiment may prevail in the coming sessions. Since the traling-stop level has been breached, we shift to a negative trading bias.

We closed out the long positions, initiated at MYR3,520 or the closing level of 25 Jun, after the trailing-stop at MYR3,800 was breached. Conversely, we initiate short positions at the closing level of 7 Jul, ie MYR3,795. To manage risks, the initial stop-loss is set at MYR3,940.

The immediate support level is revised to MYR3,711, or the low of 7 Jul, followed by MYR3,650. Towards the upside, the resistance levels are pegged at MYR3,900, followed by MYR3,978, or the high of 6 Jul.

Source: RHB Securities Research - 8 Jul 2021