Comments
The mustard seed futures traded on the National Commodity and Derivatives Exchange Ltd (NCDEX) fell over 3 per cent in the last three weeks to a low of ₹3,555 per quintal on Monday. Weak demand for mustard oil has dragged the commodity price lower in the recent times. Although the NCDEX-mustard seed futures contract has reversed higher on Tuesday, there are significant technical resistances coming up which can restrict the upside.
This gives an opportunity to short- and medium-term traders to initiate fresh short position .
Short-term view: The short-term view for the NCDEX-mustard seed futures contract is bearish. Key short-term resistance is at ₹3,650. Technically, this level could be strong resistance as two trend line resistances are poised at the same level.
So an immediate breach of this level looks less probable.
reversal from here can take the contract lower to ₹3,527 – the 50 per cent Fibonacci retracement support level.A further break below this level can drag the contract lower to ₹3,495 – the 200-day moving average level.
Traders with a short-term perspective can go short with a stop-loss at ₹3,695 for the target of ₹3,540. The bearish short-term outlook will get negated if the contract records a strong break and closes above ₹3,650. Such a break can take it higher to the next target of ₹3,680.
Medium-term view: The medium-term view is also negative for the NCDEX-mustard seed futures.
The contract has been broadly consolidating sideways over the last few months in between ₹3,400 and ₹3,680.
The recent reversal from ₹3,677 recorded on September 24 has happened from a key trend line resistance. This has increased the probability of a fall to the lower end of the sideways consolidation in the medium-term.Key resistance is at ₹3,680.
As long the contract trades below this level there is a danger of a fall to ₹3,475 – the 200-week moving average level or even ₹3,410. Traders with a medium-term perspective can hold the short position with a wide stop-loss at ₹3,710 for the target of ₹3,480. The medium-term outlook will turn bearish only on a strong breach of ₹3,680. The next target will be ₹3,850.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
Comments
COMMENT NOW
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.