After consolidating in a sideways range between ₹11,000 and ₹11,450 a quintal for about three weeks, the jeera futures contract traded on the National Commodity and Derivatives Exchange (NCDEX) has witnessed a bullish breakout of this range this week. This keeps intact the contract’s uptrend that had begun in April and provides a chance for traders to ride its uptrend by initiating long positions.
Strong export demand and also domestic demand has triggered a sharp rise in the price of this commodity in the last few months. The NCDEX-jeera futures contract has risen 18.5 per cent from the low of ₹9,665 recorded in April.
Short-term view: The short-term outlook for the NCDEX-jeera futures contract is bullish. The 21-day moving average at ₹11,150 has provided consistent support for the contract all through the recent sideways consolidation that was in place for about three weeks. A key support for the contract is at ₹11,300 which could limit any immediate fall. Declines to this level can be a good opportunity for traders to initiate long position. Immediate resistance for the contract is at ₹11,589 – the 200-day moving average. A break above this level can push the contract higher to ₹12,000 in the coming weeks. Short-term traders can go long in dips at ₹11,350 with a stop-loss at ₹11,100 for the target of ₹11,800.
The outlook will turn bearish only if the contract records a strong close below ₹11,000. Such a break can drag the contract lower to ₹10,750.
Medium-term view: The medium-term trend for the NCDEX-jeera contract is down. The recent rally since April could just be considered as a corrective rally at the moment within the downtrend. Key resistance is at ₹12,000. A strong breach of this level is required to turn the outlook bullish. A break above ₹12,000 can take the contract higher to ₹12,500 in the medium-term.
On the other hand, a reversal from this resistance level will keep the downtrend intact. It can drag the contract lower to ₹11,500 and then to ₹11,000 . Such a decline will keep alive the threat of revisiting ₹10,000 levels.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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