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The Crude Palm Oil (CPO) Futures (₹1,101 per 10 kg) contract on the Multi Commodity Exchange (MCX) has been in a broad sideways consolidation since July this year. The contact has been oscillating between ₹1,080 and ₹1,200.
The bigger picture shows that the long-term uptrend that has been in place since May last year, seems to have been broken. There is a good chance that the MCX-CPO contract will break the current sideways consolidation on the downside.
Also, the immediate resistance is at ₹1,122 that can cap the upside in the near-term. As such, as long as the contract trades below ₹1,122, we can expect the contract to break below ₹1,080 in the coming days. Such a break can drag the contract lower to ₹1,045 initially. A further break below ₹1,045 will then pave the way for a fresh fall to ₹1,000 and ₹970.
Traders can go short at current levels and accumulate at ₹1,110. Stop-loss can be placed at ₹1,130. Trail the stop-loss down to ₹1,080 as soon as the contract moves down to ₹1,055. Move the stop-loss further down to ₹1,040 as soon as the contract touches ₹1,030. Book profits at ₹1,020.
The bearish outlook will be negated if the contract breaks above ₹1,122 decisively. Such a break will then pave the way for a fresh rise to ₹1,130-₹1,150. It will also keep the broader ₹1,080-₹1,200 sideways range intact for some more time.
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