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Soya oil prices have been in a strong uptrend since April last year. The refined soya oil futures contract on the National Commodity and Derivatives Exchange (NCDEX) made a low of ₹605.4 per 10 kg in April last year, and has been on a strong upmove since then. The contract surged a whopping 31.5 per cent from this low to record a multi-year high of ₹796.35 on March 6. The prices have come-off slightly from this high and is currently trading at ₹775 per 10 kg.
Outlook
The price action over the last one week indicates that the NCDEX-refined soya oil contract could have recorded a short or medium-term high recently and is in a down move. The strong break below ₹780 on Monday indicates that a corrective fall is on the cards in the near-term. The region between ₹780 and ₹782 may now act as a good resistance for the contract. Intermediate bounce to this resistance region may find fresh sellers coming into the market. As long as the contract remains below ₹782, the near-term outlook will be negative. Intermediate support is at ₹770, a break below this level can trigger a fall to ₹760 in the coming days.
Whether the contract manages to bounce from ₹760 or not will be key in deciding the next move. An upward reversal from ₹760 will see the contract rallying to ₹780 and ₹790 levels again. But a strong break below ₹760 will increase the downside pressure. In such a scenario, the NCDEX-refined soya oil contract can fall to ₹740 or even to ₹730 on the back of profit booking.
Traders with high-risk appetite can go short at current levels and at ₹780 as well. Stop-loss can be placed at ₹795 for the target of ₹740. Revise the stop-loss lower to ₹770 as soon as the contract moves down to ₹763. Alter the stop-loss further lower to ₹760 as soon as the contract moves down to ₹755.
Key resistances are at ₹785 and ₹800. The contract will regain momentum only if it breaches ₹800 decisively. The next target is ₹820.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading
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