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Turmeric prices have become spicier over the last two weeks, as domestic and export demand have picked up.
Restricted supply from the producing regions is also lending support to the price. Turmeric futures traded on the National Commodity and Derivatives Exchange (NCDEX) recorded a low of ₹7,396 on March 30. The contract has surged 13 per cent in two weeks to the current level of ₹8,360.
Short-term view: The recent rally in the contract has room to rise further.
This renders the outlook bullish and offers a good opportunity for short-term traders to initiate long positions.
Immediate support is at ₹8,174 which is the 55-day moving average as well as a trend line support level.
This makes the level a strong support and an immediate break below this support looks less probable. While the contract trades above this level, a rise to ₹8,640 is possible in the coming weeks.
Traders with a short-term perspective can go long at current levels. Stop-loss can be placed at ₹8,145 for the target of ₹8,620. Intermediate declines to test the support at ₹8,174, if seen, can be an opportunity to accumulate.
The short-term outlook will turn negative if the contract declines below ₹8,174.
The next target will be the 21-day moving average support level which is currently placed at ₹7,858.
Medium-term view: The contract has been trading inside a bear channel since late December 2014. Currently the contract is heading towards the channel resistance at ₹8,640.
Whether this level is breached or not will decide the next leg.
If the contract manages to surpass this hurdle, then the outlook will become bullish. In such a scenario, the contract can surge to ₹10,000 levels.
On the other hand, inability to breach ₹8,640 and a reversal from there will keep the contract inside the channel for some more time. In that case, there is a possibility of the contract falling to ₹7,500 and even lower levels.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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