The Crude Palm Oil (CPO) prices are under pressure. The Crude Palm Oil futures contract on the Multi Commodity Exchange (MCX) have been on a strong downtrend over the last couple of months. The contract made a high of ₹673 per 10 kg on May 22 and had reversed sharply lower from there.
The contract has plummeted 9 per cent from its high of ₹673 and is currently trading at ₹613/10 kg. The downtrend has intensified after the contract had declined below the key intermediate support level of ₹630 last week.
Outlook
The short-term outlook remains bearish for the MCX-CPO contract. The level of ₹610 has been providing support for the contract over the last few days. If the contract manages to sustain above ₹610, an intermediate bounce-back move to ₹625 or ₹630 is possible. However, a strong rise past ₹630 is unlikely as the contract is likely to get fresh selling interest at higher levels.
A pull-back move from the ₹625-₹630 resistance zone can drag the contract lower to ₹600 or ₹585. The region between ₹590 and ₹585 is a crucial long-term support zone which is likely to halt the current down-move.
The price action around the ₹590-₹585 support zone will need a close watch which will give a cue on the next trend. A strong upward reversal from this support zone may have the potential to take the contract back to ₹630 and ₹650 levels. But if the contract declines decisively below ₹585, it will increase the pressure on the contract. In such a scenario, the contract can extend its fall to ₹570 or even ₹560 over the medium term.
Trading strategy
Short-term traders can make use of an intermediate bounce to go short at ₹625 and ₹630. Stop-loss can be placed at ₹645 for the target of ₹595. Revise the stop-loss lower to ₹620 as soon as the contract moves down to ₹610.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.