Maintain long positions. Despite a weak opening, the FCPO managed to pare most of its intraday losses, closing slightly lower at MYR4,944 – still on an upward trajectory. The commodity gapped down at the start of Monday’s session, opening at MYR4,850. It then changed its course, climbing to touch the session’s high of MYR4,950 just before the close. The latest session printed a bullish candlestick with a shaved bottom – indicating that the bulls are still in control. Amidst positive buying interest, the commodity may extend its upward movement to test the immediate resistance pegged at MYR4,981. A breach of this threshold may see the commodity retest its historical high of MYR5,039. Meanwhile, we observe that the RSI is showing mild divergence from the commodity’s price trend. The FCPO may consolidate in the next session before testing its upside resistance – the MYR4,750 level will provide a strong support. Overall the bullish structure remains intact, and therefore, we retain our positive trading bias.

Traders should keep the long positions initiated at the closing level of 22 Sep or MYR4,330. To manage downside risks, the trailing-stop is set at MYR4,750.

The nearest support is revised to MYR4,850, which was the low of 18 Oct, followed by the MYR4,750 round figure. On the upside, the immediate resistance remains at MYR4,981 or the high of 8 Oct, followed by the MY5,039 all-time high.

Source: RHB Securities Research - 20 Oct 2021