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.

Related Topics
comment COMMENT NOW