Maintain short positions. Selling pressure on the FCPO extended yesterday, and it closed MYR78.00 lower at MYR4,176. Yesterday, it gapped down at the open at MYR4,196, then drifted sideways for most of the session before a jump to test the day’s high of MYR4,284. However, the bullish momentum failed to follow through, and the commodity shifted downwards to record a “lower low” of MYR4,173 before the close. Yesterday’s session shows that bears remain in control of the market, and selling pressure should persist until the FCPO hits a strong support level. The corrective movement may continue until it forms a candlestick with a long lower shadow or bullish reversal pattern. For now, we make no change to our negative trading bias.

Traders should remain in short positions, which were initiated at MYR4,238 or the closing level of 19 Aug. To manage risks, the stop-loss is set at MYR4,393.

The first support level remains at MYR4,160 or the low of 23 Aug, then MYR4,074 or the low of 22 Jul. Towards the upside, the nearest resistance has been revised to MYR4,300, then MYR4,393 or the high of 27 Aug.

Source: RHB Securities Research - 2 Sept 2021