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The Coriander futures contract traded on the National Commodity & Derivatives Exchange (NCDEX) has skyrocketed over 11 per cent in the last couple of weeks. Prior to this rally, the coriander prices were under pressure and was in a strong downtrend. Increase in supplies and expectation for a higher production this season saw the prices slumping over 40 per cent from around ₹7,800 in April to a low of ₹4,535 earlier this month. The NCDEX-Coridander contract has reversed higher from this low and is currently trading at ₹5,170 per quintal. The strong bounce back rally in the last two weeks has given some relief to the prices and is giving out an early signal of a trend reversal.
Outlook The price action on the chart suggests that the NCDEX-Coriander contract has failed to get strong sellers to drag it below ₹4,500 levels. A week of consolidation above ₹4,500 followed by a strong rise breaking above the psychological ₹5,000 mark indicates the emergence of fresh buying interest in the contract.
The contract has broken decisively above the 21-day moving average at ₹4,855. Strong support is poised in the band between ₹5,000 and ₹4,850. Dips to this support zone may find fresh buying interest coming into the market. Also there is a complex inverted head and shoulders pattern which is a bullish reversal pattern visible on the daily chart. The neckline of this pattern is poised at ₹4,950.
All these factors leaves the short-term outlook bullish for the NCDEX-Coriander contract. A rise to ₹5,700 and ₹5,815 – the 38.2 Fibonacci retracement resistance level is possible in the coming week. Inability to break above ₹5,815 can trigger a pull-back move to ₹5,500 or even lower. But a strong break above ₹5,815 will see the upmove extending to ₹6,000 and ₹6,100.
Traders with a medium-term perspective can go long. Stop-loss can be placed at ₹4,800 for the target of ₹5,800. Revise the stop-loss higher to ₹5,300 as soon as the contract moves up to ₹5,450.
Key support for the contract is in the ₹4,850-₹4,800 zone. The outlook will turn negative only if it declines below ₹4,800. In such a scenario, the possibility of a fall to revisit ₹4,500 levels will increase.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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