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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
16 August 2010
MARKET DATELINE

Commodities & Currencies


A Dramatic Rebound On The US$ Likely To Continue…

Chart Performance on Key Commodities:

Light Sweet Crude Oil futures (Crude)


Chart 1: Light Sweet Crude Oil Futures Weekly

♦ As feared, the US Light Sweet Crude Oil futures


plunged in last week’s trading following a record of a
“shooting star-like” candle in the week before.

♦ Chart wise, it recorded a huge bearish candle, pointing


to further selling pressure likely this week.

♦ As it also fell to below the supportive 40-week SMA of


US$77.4, coupled with the fresh “double sell” signal on
the momentum indicators, the Crude is poised to fall
further this week.

♦ It is therefore expected to revisit the crucial UTL near


US$73 soon, before showing any signs of a potential
technical rebound.

♦ If it loses the critical UTL, it will head to the low of


US$64.24 and the key support of US$60 soon.

Crude Palm Oil futures (CPO)


Chart 2: Crude Palm Oil Futures Weekly

♦ The crude palm oil futures (CPO) continued its stellar


uptrend last week, and moved into its fifth week of rally
to close one notch closer to its technical resistance of
RM2,760.

♦ It recorded its fifth positive candle, suggesting follow-


through buying support likely this week.

♦ As the commodity moved to its fresh year high of


RM2,737 last Friday, it has forced the momentum
indicators to close even more upbeat last week.

♦ The CPO is going to retest the resistance of RM2,760


soon, in our view.

♦ Only if it fails to surpass this hurdle, will the profit-


taking activities resume. Otherwise, it could be well
underway to rise towards the RM3,000 – RM3,300
heavier resistance zone in the near future.

Please read important disclosures at the end of this report.

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Chart Intepretations On Selective Currencies:

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

♦ Although the RM/US$ pair managed to reach a fresh


year low of 3.1388 last week, the pair rebounded and
ended the week with a positive candle.

♦ Last week’s candle, though it was not as bullish as a


“bullish engulfing” candle, it still indicates a potential
reversal on the recent negatively bias trend.

♦ Closed on the dot of the previous low of 3.16, the


ringgit could soften further against the US dollar, if the
chart surpasses the 3.16 level soon.

♦ That, if it occurs, will lead to a rebound on the


greenback towards the 3.29 level near the 35-week
SMA.

♦ On the other hand, if it fails to remove 3.16, the


ringgit could rebound and force the US dollar to
resume its weakening path to 3.07 in the near term.

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

♦ Despite two negative candles registered two weeks in


a row, the JPY/US$ managed to register a positive
candle last week.

♦ Closed at 86.28, near the crucial level of 87, and


almost on the dot of the Downtrend Resistance Line
(DRL), the pair is showing its resiliency of clinging
nearer to the crucial level of 87 and the DRL.

♦ Chart wise, as both the momentum indicators are


showing poor readings near the “oversold” region, any
rebound ahead, if any, could be shallow, in our view.

♦ Only if the pair surpasses the DRL and 87, will it


trigger a technical rebound on the US dollar.

♦ Otherwise, we remain positive bias on the strength of


the yen against the greenback.

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

♦ The EUR/US$ pair surprised us with a sharp technical


rebound last week, registering a huge bullish candle on
the chart.

♦ The rebound, has lifted the pair to close back to above


the crucial level of 0.77 and above the 21-week SMA of
0.78.

♦ This, coupled with the “double buy” signal n the


momentum indicators, suggests a follow-through
buying momentum likely on the US$ this week.

♦ In our view, if it sustains at above 0.77 in the near


term, it will see follow-through rally to 0.80 soon.

♦ Lower supports are seen at the recent low of 0.75 and


the crucial 0.73 level.

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

♦ Surprisingly, the US Dollar index (DXY) staged a


powerful rebound last week, in tandem with the “eight-
to-ten” candle count pattern we highlighted earlier.

♦ Last week’s rebound halted its nine weeks of retreat


and showed a huge bullish weekly candle on the chart,
and traded back to above the crucial support of 81.

♦ Added with a “double buy” signal on the momentum


indicators, the dollar index is likely to see follow-
through buying momentum this week.

♦ If it removes the important 21-week SMA near 84, it


will rechallenge the key level of 85 in the near term.

♦ However, without removing this critical resistance


region from 84 – 85, we are of the view that the
index’s medium-term trend remains negative.

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
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

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.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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