Wheat futures contract traded on the NCDEX has reversed sharply higher over the last one month after recording a low of ₹1,465 a quintal on June 10.
The contract is up about 10 per cent from this level.
The contract has also breached its 200-day moving average resistance at ₹1,609 on Tuesday. The trend is up and traders can consider to ride it by initiating a long position in this contract
Short-term view: The short-term outlook is bullish. Immediate support for the contract is at ₹1,595, where the 55-week moving average level is positioned.
Resistance for the contract is at ₹1,613 – the 61.8 per cent Fibonacci retracement level.
As long as the contract trades above these support levels, the probability of a to rise to ₹1,640 remains high.
Long position is recommended only for the short-term traders who have high risk appetite. They can initiate fresh long position now with a stop-loss at ₹1,590 for the target of 1,635.
The short-term outlook will turn negative if the contract declines below ₹1,595. The ensuing target will be ₹1,570.
Medium-term view: The medium-term outlook for the NCDEX-wheat futures contract is also bullish.
The contract has decisively breached its 50 per cent Fibonacci retracement level of ₹1,556. This level could now serve as a good resistance-turned-support. Key resistance for the contract is at ₹1,640.
A break above this level can take it higher to ₹1,700 in the coming weeks. Traders with a medium-term perspective can initiate long position with a stop-loss at ₹1,545 for the target of ₹1,700.
If the contract declines below its intermediate support at ₹1,595, then fresh longs can be initiated at ₹1,575 with same stop-loss.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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