Soya oil prices have been trading subdued over the last few weeks. The Refined Soy Oil futures contract on the National Commodity and Derivatives Exchange (NCDEX) had made a high of ₹786.75 per 10 kg in the last week of May and has come-off sharply from there.

The contract has tumbled 7 per cent from this high and is currently trading at ₹732.

Mixed prospects

The short-term outlook remains mixed as the contract is nearing a crucial support zone. A cluster of supports is poised in the band between ₹730 and ₹723. A near-term dip to test these supports looks likely. However, whether the contract reverses higher thereafter or not will decide the next move.

If the contract manages to reverse higher in the coming days from the ₹730-₹723 support zone, a relief rally to ₹750 or ₹755 is possible. The 21-week moving average is at ₹755 which is a crucial short-term resistance.

The outlook will turn positive only if the contract breaches this hurdle decisively. Such a break will then pave the way for the next targets of ₹780 and ₹790.

On the other hand, if it breaks below ₹723 in the coming days, it will come under pressure. Such a break will then increase the likelihood of the contract extending its downmove to ₹700 in the short-term.

The indicators on the chart are giving negative signals. The 21-day moving average has crossed below the 200-day moving average. Also, the 55-day moving average is on the verge of crossing below the 200-day moving average. These are negative signals indicating that the upside could be restricted and a further fall is possible.

As such, the possibility looks high of the contract breaking below ₹723 in the coming days.

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

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