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The jeera futures contract traded on the National Commodity and Derivatives Exchange (NCDEX) jumped ₹605 or 3.6 per cent on Wednesday to ₹17,370 a quintal. The contract found support at around ₹13,000 early February 2016 and changed direction triggered by positive divergence.
Since then, the contract has been on a medium-term uptrend. The outlook is bullish for the contract and gives opportunity for traders with a short-term perspective to initiate long position in this contract.
Short-term view: The short-term downtrend that commenced from the late November 2015 peak of ₹16,280 came to a halt in early February this year at around ₹13,000. Subsequently, the contract reversed direction and started to trend upwards.
While trending up, the contract decisively breached the key resistances at ₹15,000 in late March and ₹16,500 in the previous week. Moreover, the contract trades well above its 50-and 200-day moving averages. The short-term uptrend will be in place as long as the contract trades above the significant trend deciding level of ₹15,500.
Immediate supports are at ₹17,000 and ₹16,500. Traders with a short-term horizon can make use of dips to buy the contract while maintaining a stop-loss at ₹16,900. The contract can trend upwards to ₹18,000 or ₹18,250 in the short-term.
Medium-term view: The contract has been on a medium-term uptrend since taking support at around ₹13,000 in early February this year. This uptrend got accelerated in early April and the contract conclusively breached a key resistance at ₹15,500 which later turned in to an important support level.
The medium-term uptrend will stay in place as long as the contract trades above the base level of ₹15,000.
Traders with a medium-term horizon can also buy the contract in dips with a stop-loss at ₹16,400. Continuation of the uptrend can take the contract higher to ₹18,500 and then to ₹18,700 in the medium term.
Key medium-term supports are placed at ₹15,500 and ₹15,000. Only a strong fall below ₹15,000 will alter the uptrend and drag the contract down to ₹14,400 and ₹14,000 levels.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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