Technical Analysis

Accumulate soyabean on NCDEX if price drops to ₹6,200

Akhil Nallamuthu BL Research Bureau | Updated on November 23, 2021

Peg stop-loss at ₹5,950

The continuous contract of soyabean on the National Commodity and Derivatives Exchange (NCDEX), after hitting a high of ₹10,680 in early August, has been on a decline. There was considerable sell-off and the contract marked a low of ₹5,093 a month ago, losing about 52 per cent. Nevertheless, the price band of ₹5,000-5,100 acted as a strong support from where the contract started to appreciate.

It has made considerable recovery from the base of ₹5,000 and it rallied past a critical level of ₹6,400 last week. The price is now above both 21- and 50-day moving averages (DMAs) and moreover, the RSI and the MACD on the daily chart shows steady uptrend, improving the probability of further gain. But the contract might moderate to ₹6,200 before resuming the uptrend which can lift it towards the key resistance band of ₹7,280-7,360. But note that there can be pause at ₹7,000.

Hence, traders can consider initiating first leg of buy at current level of ₹6,530 and accumulate more if price drops to ₹6,200. Initially place stop-loss at ₹5,950. On the upside, when the contract moves above ₹7,000, revise the stop-loss to ₹6,600. Liquidate the long positions when the contract reaches the price band of ₹7,280-7,360. On the other hand, if the contract rallies above ₹7,000 without dropping to ₹6,200, keep stop-loss at ₹6,600 for the first leg of longs. Supports below ₹6,400 can be spotted at short intervals, that is, at ₹6,200 and ₹6,000 which is favourable for the bulls.

Published on November 23, 2021

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