Trailing-stop triggered; initiate short positions. The FCPO saw strong selling pressure yesterday, as it fell MYR220.00 to settle at MYR5,437. The commodity opened sharply lower at MYR5,455 – due to the rollover of the futures contract – and then whipsawed between the day’s high and low of MYR5,547 and MYR5,358, before closing near its opening price. The price action saw the FCPO breach below the immediate support and trailing-stop levels, indicating that selling pressure is becoming more evident. This, coupled with the RSI pointing lower – towards the 50% level – leads us to expect bearish momentum to continue dominating the sessions. As the trailing-stop was triggered, we shift to a positive trading bias.

We closed out our long positions, initiated at MYR4,649, or the close of 24 Dec 2021, after the trailing-stop at MYR5,445 was triggered. Conversely, we initiate short positions at the closing level of 16 Feb, or MYR5,437. To manage trading risks, the initial stop-loss threshold is placed at the MYR5,700 level.

The immediate support is shifted lower to MYR5,278, followed by MYR4,912. Conversely, the nearest resistance is still at MYR5,450, followed by MYR5700.

Source: RHB Securities Research - 17 Feb 2022