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The jeera futures contract traded on the National Commodity and Derivatives Exchange (NCDEX) has began this week on a strong note. The contract has surged 4 per cent to record a high of ₹16,200 per quintal on Monday. The contract has risen over 6 per cent from ₹15,060 recorded on November 13 to the current levels of ₹15,990. The limited arrivals in the spot market, increase in export demand and also slow progress in sowing are the major factors that have driven the price higher. The short-term outlook is bullish and the contract has good chance of extending its rally in the coming days. This offers a good opportunity for the traders with a short-term perspective to go long in this contract.
Short-term viewThe downtrend that had begun from the October high of ₹16,580 has halted at a low of ₹14,980 in early November. The contract has surged about 7 per cent from this low. It is decisively poised well above the 200-day moving average at ₹15,915. Key short-term support is at ₹15,500.
There is no immediate downside threat for the contract as long as it trades above this support level. A rise to ₹16,500 and ₹16,700 looks likely.
Traders with a short-term perspective can go long. Stop-loss can be placed at ₹15,400 for the target of ₹16,600. Intermediate dips to ₹15,500 if seen can be used to accumulate long positions.
The short-term outlook will turn negative only if the contract records a strong break and a close below ₹15,500. Such a break can pull it lower to ₹15,000 thereafter.
Medium-term viewThe broad sideways movement between ₹14,400 and ₹16,700 since June leaves the medium-term outlook unclear for the contract. The major moving averages on the daily charts are all flat suggesting that the trend is sideways consolidation.
A breakout on either side of this range will decide the next leg of move for the contract.
A strong break above ₹16,700 will be bullish. Such a break can take the contract higher to ₹17,200 initially and then to ₹18,000. On the other hand, a strong break and a decisive weekly close below ₹15,000 will be the first bearish signal.
It will increase the danger of the contract breaking below ₹14,400. In that case, the next targets will be ₹14,000 and ₹13,500.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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