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The coriander (dhaniya) futures contract traded on the National Commodity and Derivatives Exchange Ltd (NCDEX) is in a long-term uptrend. The contract is up a whopping 43 per cent so far this year.
Within the uptrend, the contract has currently dropped about 6 per cent in the last three weeks. This fall is expected to extend.
Short-term traders are therefore advised to initiate short position in this contract.
Short-term view: The contract is facing strong resistance at ₹12,000/quintal level. The contract is unable to breach this level since late July. The short-term outlook is bearish while the contract trades below ₹12,000.
Also, the price action on the chart suggests the formation of a double-top reversal pattern. The neck line resistance of this pattern is poised near ₹11,700. Since the contract has been rising continuously all through this year, there is a strong likelihood of a reversal from the immediate resistance at ₹11,700.
Having said this, the contract can fall to test its 21-week moving average support at ₹10,740.
Traders with a short-term perspective can initiate fresh short position at current levels. Stop-loss can be placed at ₹11,850 for the target of ₹10,770. Rallies to ₹11,700, if seen, can be considered for accumulating more short positions.
The contract could get some relief only if it breaches ₹11,700 decisively. In such a scenario, it can rise to test ₹12,000 once again.
Medium-term view: The medium-term trend is up for the NCDEX-coriander futures contract. The reversal from the high of ₹12,175 recorded last month could be just a corrective fall of the strong up-trend that is in place since August last year.
Key medium-term support is at ₹9,500 and there is no threat to the bullish outlook as long as the contract trades above this level. Reversal from ₹9,500 can take it back to ₹12,000.
The psychological level of ₹12,000 is the key resistance for the contract now.
A strong breach of this level can take the contract higher to the next target of ₹13,500.
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