The mustard seed futures contract traded on the NCDEX has been in a strong up-trend since June - rising 7.2 per cent from the low of ₹3,338 a quintal recorded on June 2.

The contract reversed lower last week after recording a high of ₹3,665 on July 21. However, the up-trend is intact. The contract is nearing a key support level which can limit the fall. Traders can initiate fresh long position at this juncture.

Short-term view: The short-term trend is up. The pull-back last week could be just a corrective fall within the overall up-trend. Key short-term support is at ₹3,550. An immediate break below this level is not likely. The probability is high for the contract to reverse higher in the coming days after testing this support level.

Traders with a short-term perspective can go long at ₹3,550. Stop-loss can be kept at ₹3,480 for the target of ₹3,680. The short-term outlook will turn negative if NCDEX-mustard seed declines below ₹3,550. Then, the current fall can extend to ₹3,525 – the 200-day moving average and ₹3,500, the next significant support levels.

Medium-term view: The contract has been range bound between ₹3,270 and ₹3,650. A break out of this range will determine the future course for the contract. Within the range, the bias is bullish; there may be a break above ₹3,650.

The 200-week moving average at ₹3,435 is providing strong support for the contract over the last few months. So while the contract trades above this support, the probability is high for it to breach ₹3,650 and rise to ₹3,850 in the medium-term.

The medium-term view will turn bearish only if the contract records a strong break and weekly close is below its 200-week moving average.

The ensuing target on such a break will be ₹3,240.

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