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Coriander ( dhaniya ) futures traded on the National Commodity and Derivatives Exchange Ltd (NCDEX) have been under pressure in the last one week. The strong rally in the contract that had begun in March halted at a high of last week at ₹13,444. The contract reversed lower from this high and is currently trading near ₹11,969. Weak demand in the spot market and a strong surge in arrivals has forced speculators to book profits in the contract. The outlook is bearish and there is room for the contract to decline further in the coming days. Traders can use this opportunity to take short positions in the contract.
Short-term viewThe contract faces a strong resistance in the ₹13,000-13,500 zone. There is an immediate support at ₹11,845 – the 21-day moving average level, but it looks vulnerable for a break in the coming days. Also since the contract has risen a whopping 117 per cent in a shot span of three months, it is now ripe for profit taking. A corrective fall is on the cards. A break below ₹11,845 can drag the contract lower to ₹11,700 and ₹11,645 – the 38.2 per cent Fibonacci retracement support level. Further fall below this support can target to ₹11,000 and then to ₹10,500 in the short-term. Traders can go short. Stop-loss can be kept at ₹12,650 for the target of ₹11,000.
The outlook will turn positive only if the contract records a decisive break and a close above ₹13,500. Such a break can then take the contract further higher to ₹14,000 and ₹14,500.
Medium-term viewThe contract has failed to decisively breach the previous high of ₹13,345 recorded in November 2014. As long as the contract trades below the resistance zone of ₹13,000-13,500 there is a strong likelihood that the current fall can extend to ₹10,000 or even to ₹9,780 – the 50 per cent Fibonacci retracement support level. This ₹10,000 and ₹9,780 levels are strong support levels. A reversal from these supports can take the contract higher to ₹13,000 and ₹13,500 once again in the medium term. A strong break below ₹9,780 will increase the danger of the contract falling further to ₹9,000 or even to ₹8,000.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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