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
12 July 2010
MARKET DATELINE

Commodities & Currencies

Sustained Weakness On The US$ 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 rebounded

unexpectedly last week from the Long-term UTL near
US$73.

♦ The timely rebound has saved the commodity from

falling into a long-term bearish zone on the chart.

♦ Recorded with a positive candle on the chart plus a

hook-up on the 14-week RSI, the Crude could roll into
a recovery leg in the near future.

♦ However, as the weekly stochastic just cut a fresh

“sell”, and that it is still trading below the 40-week
SMA near the immediate resistance at US$78, risk is
still there for the sellers to return this week.

♦ It must remove these hurdles before more upside can

be expected.

Crude Palm Oil futures (CPO)

Chart 2: Crude Palm Oil Futures Weekly

♦ In line with our earlier expectation, the crude palm oil

futures (CPO) fell last week, to a low of RM2,270, before
rebounding in the second half of the week.

♦ It closed the week at RM2,300, with a “hammer-like”

candle, suggesting a slight possibility of a rebound this
week.

♦ The weekly stochastic has reached the “very oversold”

region, and the 14-week RSI got nearer to the
“oversold” level. But the momentum indicators still lack
an uptick to trigger a recovery in buying momentum.

♦ In our opinion, the CPO will still face significant

resistances near the 10-week and 40-week SMAs at
RM2,420 and RM2,469, near the key hurdle of RM2,500.

♦ Unless it can retake the RM2,500 heavy resistance level,

the medium-term outlook remains negative.

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Chart Intepretations On Selective Currencies:

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

♦ The RM/US$ pair continued its trend in the previous

week and closed lower on last Friday.

♦ The ringgit ended last week at 3.1927 and registered

another bearish candle on the RM/US$ chart.

♦ As both the momentum indicators are moving towards

the oversold region, the ringgit is expected to
strengthen this week towards the Apr’s low of 3.1614.

♦ Chart resistance is seen at the 3.29, near the 35-week

SMA of 3.3179.

♦ Without removing these hurdles, the medium-term

outlook of the ringgit will remain bullish, against the
US dollar.

♦ Upon removal of the Apr’s low, it will head towards the

3.07 lower level reached in Mar 2008.

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

♦ Instead of breaching the critical level of 87.00, the

JPY/US$ pair rebounded timely last week and closed
Friday at 88.57.

♦ On the chart, the pair registered a small positive

candle, suggesting a likely reversal of the previous
buying momentum on yen, against the US dollar.

♦ If the yen traded softer this week, the weekly

stochastic and the 14-week RSI will stage a rebound,
hence triggering a technical rebound on the chart.

♦ This will point the pair to the 60-week SMA at 91.96,

followed by 95.5.

♦ However, for that to happen, the yen must first sustain

at above 87.00 against the greenback this week.

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

♦ Following a “bearish engulfing” candle in the previous

week, the EUR/US$ pair fell further last week and
registered another negative candle on the chart.

♦ This suggests the buying of the EUR against the US$

will likely continue this week.

♦ Given the weakened momentum readings on the

indicators, the downswing could accelerate further, in
our view, if the pair fails to regain 0.80.

♦ A lower chart support is seen at 0.77, near the 21-

week SMA, followed by another level at 0.73.

♦ On the upside, the chart will face a tough resistance at

0.80, before heading back to Jun’s high of 0.8416, and
the 0.85 level.

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

♦ The US Dollar index (DXY) registered its fifth week of

retreat last week, and recorded its fifth negative
candle on the chart on Friday.

♦ Last week’s fall caused a confirmation signal of the

previous week’s losing of the key 85.00 level.

♦ The signal indicates that the US dollar is likely to

weaken further in the near future, if it fails to retake
the key level at 85.

♦ There is a mild support seen at the 21-week SMA near

83.38, but given the poor momentum readings, the
index should remain weak this week.

♦ Should the 21-week SMA give way, the index will head
lower to the 81.00 level on follow-through selling
momentum.

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
opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or
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
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
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The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
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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.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

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actions of third parties in this respect.

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