PP 7767/09/2010(025354)

Malaysia Technical Research

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

W e e kl y T e ch ni ca l V ie w p o int
15 March 2010
MARKET DATELINE

Commodities & Currencies

More Weakness On The US$ Imminent This Week…

Chart Performance on Key Commodities:

Light Sweet Crude Oil futures (Crude)

Chart 1: Light Sweet Crude Oil Futures Weekly

♦ The US Light Sweet Crude oil futures extended its run-

up by rising to a multi-week high of US$83.16 on
Friday, before staging a negative reversal to end the
week lower at US$81.24.

♦ As the commodity recorded a smaller positive candle,

plus its failure to retake Jan’s high of US$83.95, a
slight pullback could be underway this week.

♦ But, as it still closed at above the US$80/barrel

psychological level, short-term weakness should be
well absorbed. Further support is expected near the
resistance-turned-support level of US$78.

♦ For now, its immediate resistance stays at Jan’s high

of US$83.95, followed by the next upside hurdle at
US$87.

Crude Palm Oil futures (CPO)

Chart 2: Crude Palm Oil Futures Weekly

♦ The crude palm oil futures (CPO) pulled back slightly

last week after hitting an intra-week high of RM2,722,
its highest since early Jan 2010.

♦ With a small negative candle amid a failure to remove

Jan’s high of RM2,726, follow-through selling can be
expected this week.

♦ Not helping either, the marginal “sell” signal on the

stochastic oscillators could add to the downside
pressure early this week.

♦ All said, we remain optimistic that the supportive 10-

week SMA near RM2,562 and the breakout point at
RM2,500 will cap its near-term downside.

♦ Upon the revival of upward momentum, it will

rechallenge RM2,726 and the RM2,760 resistance soon.

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Chart Intepretations On Selective Currencies:

Chart 3: RM/US$ Weekly Ringgit (RM)/US$

♦ As expected, the RM/US$ chart extended its slide with

the ringgit strengthening further towards the crucial
level of 3.29 last week.

♦ Ended with a second huge bearish candle, as well as

the sliding weekly momentum indicators, the ringgit is
likely to strengthen further against the US$ this week.

♦ And with a closing at 3.3014 last Friday, an immediate

test to the major 3.29 level looks imminent.

♦ Breaching 3.29 will lead to stronger ringgit hence

pushing it closer to the Head & shoulders formation’s
target at 3.07, as well as Mar 2008’s low of 3.0429.

♦ Its immediate hurdles remain at the 3.40 level, the

extended Neckline near 3.43 and the 35-week SMA
nearby.

Chart 4: JPY/US$ Weekly Japanese Yen (JPY)/US$

♦ In line with our expectation, the JPY/US$ chart has

met with strong resistance last week near the
downtrend resistance line (DRL) near 91.

♦ In fact, the pair registered a “doji” candle on the chart,

and a fresh “sell” signal on the weekly stochastic
oscialltors, indicating a likelihood of stronger yen this
week, against the greenback.

♦ This could pave ways for the yen to resume its uptrend
towards 87 in the near term, unless the pair stages a
surprise breakout from the DRL.

♦ If the yen strengthens beyond the 87 key level, it

could extend its strength towards the 2009 Nov’s low
of 84.80, followed by the 79.8 lower support level.

Chart 5: EUR/US$ Weekly Euro Dollar (EUR)/US$

♦ After accumulating four consecutive “doji” candles, the

EUR/US$ pair ended the recent sideways trend with a
negative candle last week.

♦ Undermined by a failure of penetrating the 0.73 level,

coupled with the weakened momentum readings, the
Euro is ready to rebound from the previous downtrend
against the US$.

♦ Therefore, the pair is likely to head lower towards the

21-week SMA near 0.699, nearer to the 0.695 support
level, if the recovery momentum persists.

♦ Following last week’s retreat, 0.73 stays firm as a key

resistance level for the greenback.

♦ The potential rebound on the EUR will be voided if the

pair moves beyond 0.73 unexpectedly.

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 US Dollar Index (DXY)
Chart 6: US Dollar Index Weekly

♦ Following the US Dollar index’s (DXY) failure to

penetrate the heavy resistance level at 81.0 for the
past 5 weeks, it showed a clear negative candle on the
weekly chart on Friday.

♦ The weakness was not a surprise, as we have been

warned of a near-term decline following the recent
“tweezer top” candles formation.

♦ Not only that, as both momentum indicators have

begun moving lower, the downside pressure is
expected to intensify in the coming week.

♦ Any pullback could see a revisit of the next support at

78, near the 21-week SMA of 77.98.

♦ Meanwhile, the 81 hurdle will continue to cap the

dollar index’s upside potential going forward.

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The
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be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
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This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
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Technical recommendation framework for stocks and sectors are as follows: -

Technical Recommendation:
Trading Buy = Short-term positive opportunity spotted. It is an aggressive trading recommendation with a book to sellers’ price for short-term technical upside.
Bargain Buy = Short-term positive but technical signals have yet to trigger a rally. Traders can park and queue for their desired entry level within a small range.
Buy on Weakness = Short- to Medium-term positiveness anticipated, but technical readings are still negative. Traders can pick-up the stock for future rally.
Sell on Strength = Short-term momentum still positive, Traders are advice to lock in profit base on current strength.
Take Profit = Short-term target achieved. Traders are advice to exit before the technical readings turn bearish.
Avoid = Risky situation in the short-term and high volatility expected on the share price. Traders’ best strategy is staying away until it stabilises.

Technical Time Frame:

Immediate-term = short time frame within a contra period.
Short-term = moderate time frame within two to three contra periods. For tracking purposes, we refer to 10 trading days.
Medium-term = medium time frame usually refers to two to three weeks period. For tracking purposes, we refer to 20 trading days.

Technical recommendations are generally short-term in nature and may differ from RHBRI’s equity fundamental view and recommendation on the same company.

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