Commodity Calls

Bearish outlook for cardamom

Gurumurthy K | Updated on January 09, 2018 Published on October 31, 2017

_BL05-CARDAMOM



Cardamom prices have been under pressure since the beginning of this year. The cardamom futures contract on the Multi Commodity Exchange (MCX), which was hovering above ₹1,500 per kg in January this year, tumbled to a low of around ₹900 in early June. A recovery rally thereafter found resistance at around ₹1,300 in mid-September and the prices had turned lower again. It is currently trading at around ₹960. Weak demand on the back of increased supply has been keeping the prices under pressure over the last few weeks.

Outlook

Inability to breach above ₹1,300 per kg in September is a negative for the MCX-Cardamom futures contract. The sharp pull-back since then keeps the downtrend that has been in place since January intact.

Short-term resistance is in the band between ₹1,050 and ₹1,100. The next key resistance is in the ₹1,250-₹1,300 region. A strong break and a decisive close above $1,300 is needed for the contract to turn the outlook bullish. But such a strong rally is unlikely at the moment.

Support is at ₹930. A strong break below it can take the contract lower to ₹900 initially. Further break below ₹900 will increase the likelihood of the fall extending to ₹800 or even ₹750 over the medium-term.

Traders with a medium-term perspective can go short on rallies at ₹1,020. Accumulate longs at ₹1,050. Keep the stop-loss at ₹1,120 for the target of ₹820. Revise the stop-loss lower to ₹970 as soon as the contract moves down to ₹900.

Such a fall will push the contract into the bear-zone from a long-term perspective. This will leave the possibility high of the contract revisiting ₹600 levels over the long-term. Any intermediate bounce from ₹800 or ₹750 may find strong resistance at the psychological level of ₹1,000.

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

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on October 31, 2017
This article is closed for comments.
Please Email the Editor