Commodities

Corrective fall likely in NCDEX soyabean, before an upmove

Gurumurthy K BL Research Bureau | Updated on January 31, 2018 Published on January 31, 2018

The soyabean has begun 2018 on a strong note. The soyabean futures contract on the National Commodity and Derivatives Exchange (NCDEX) has skyrocketed over 20 per cent so far this year. The contract had surged to a high of ₹3,849 per quintal on Tuesday and has come-off sharply from there to close at ₹3,708, up 21 per cent so far this year.

A draw-down in supplies in the physical market coupled with a sharp fall in inventories have been pushing the soyabean prices higher since the beginning of this month.

The outlook remains bullish on the charts. But since the prices have risen sharply in a short span of time, a corrective fall can’t be ruled out in the short-term before a fresh leg of upmove begins.

Outlook

A key resistance is at ₹3,850 for the contract which is holding as of now. As mentioned above, since the contract has risen sharply in a short span of time, there is a strong likelihood of the resistance at ₹3,850 to limit the upside and can trigger a corrective fall. In that case, a pull-back move to ₹3,580 is possible in the short-term as long as the contract trades below ₹3,850. A break below ₹3,580 will increase the likelihood of the contract extending its corrective fall to ₹3,450 or ₹3,430. However, further fall below ₹3,430 is unlikely. An eventual upward reversal from ₹3,580 or ₹3,430 will see the uptrend resuming towards ₹3,850 again. A strong break above ₹3,850 will pave way for the next targets of ₹4,100 and ₹4,200.

Traders with a medium-term perspective can wait for dips and go long at ₹3,605. Accumulate longs at ₹3,500 and ₹3,450 if the contract declines below ₹3,580. Keep the stop-loss at ₹3,350 for the target of ₹4,100. Revise the stop-loss higher to ₹3,650 as soon as the contract moves up to ₹3,750. Revise the stop-loss further higher to ₹3,750 as soon as the contract moves up to ₹3,850.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

Published on January 31, 2018
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