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The continuous contract of soyabean on the National Commodity and Derivatives Exchange (NCDEX) witnessed a stellar rally in 2021 until the end of last month. It rose from about ₹4,600 levels to hit a high of ₹10,680 in the last week, thereby gaining 2.3 times in the first seven months of the year.
Although there was a broad consolidation phase between April and June, when the contract was largely oscillating between ₹6,800 and ₹8,000, it managed to breakout of this range in July and hit the high of ₹10,680. However, since hitting the high, the contract started to struggle. On Tuesday, the contract slipped below the important support of ₹9,000 and below the 21-day moving average, which currently lies at around ₹8,950. This indicates that the futures is likely to trade with a downward bias in the coming days.
Supporting the bearish outlook, the relative strength index (RSI) entered the negative territory and the moving average convergence divergence (MACD) has turned its trajectory downwards.
Traders can consider initiating fresh short position in soyabean August futures with stop-loss at ₹9,150 and look for a target of ₹8,100.
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