Maintain short positions. The FCPO slipped below the MYR4,700 level on Tuesday, plunging MYR185.00 to close at MYR4,672 – breaching below the 50-day SMA line. The commodity initially opened on negative sentiment, gapping down at MYR4,760. After printing the session’s high of MYR4,806, selling pressure continued to drag the commodity lower towards MYR4,638 before the close. The latest price action affirms that the commodity has entered a correction phase, and may drift lower to test the MYR4,600 level, followed by MYR4,486. For now, the 50-day SMA line will act as a resistance. The downward correction should continue until the commodity finds its interim base with a long lower shadow or a bullish reversal candlestick. Since the bears are in control now, we are sticking to a negative trading bias.

Traders should stay in short positions initiated at MYR4,849, or the closing level of 26 Nov. To manage trading risks, the initial stop-loss has been set at MYR5,000.

The immediate support has been revised to MYR4,600, followed by MYR4,486 (4 Oct’s low). On the upside, the nearest resistance is now at MYR4,800, followed by MYR4,900.

Source: RHB Securities Research - 1 Dec 2021