Keep short positions. Profit-taking activities on the FCPO continued yesterday, and it shed MYR113.00 to settle at MYR4,295 – just above the 200-day average line of MYR4,241. Yesterday, the commodity opened weaker at MYR4,380 then attempted to move higher by hitting the intraday high of MYR4,419, but this was short-lived. Selling pressure continued to dominate the session, and dragged the commodity lower towards the day’s bottom of MYR4,294 just before the close. The latest long black body candlestick – heading towards the 200-day SMA line - indicates that the negative momentum is expected to persist towards the MYR4,250 immediate support level, supported by the “lower high” bearish pattern. Breaching below the immediate support will further print a “lower low” bearish structure – falling further into negative territory. Supported by the weakening RSI below 30%, we expect selling pressure to become more apparent – with the FCPO falling below both the average line and support level. As such, we maintain a bearish trading bias.

We recommend that traders keep to short positions initiated at MYR4,699, or the closing level of 14 Dec. To manage the trading risks, the trailing-stop is at MYR4,567 – the lowest of 2 Dec.

The immediate support is pegged at MYR4,250, followed by MYR4,125. Towards the upside, the immediate resistance is set at MYR4,500, and the higher hurdle of MYR4,567, ie 2 Dec’s low.

Source: RHB Securities Research - 21 Dec 2021