The Soybean futures contract on the National Commodity and Derivatives Exchange (NCDEX) sank to a low of ₹2,643 per quintal on June 5 and has skyrocketed 14 per cent from there to revisit the psychological level of ₹3,000 per quintal last week.

Soybean prices have reversed higher and there have been on a constant rise since June. Though the contract fell after making a high of ₹3,020 last week, it has reversed higher again from Friday’s low of ₹2,871. It is currently trading at ₹2,920 .

Outlook

The bounce-back from Friday’s low of ₹2,871 is significant as the rally has happened from a key 38.2 per cent Fibonacci retracement support level. This suggests that the pull-back from the high of ₹3,020 is just a corrective fall and the subsequent uptrend that had begun from the June low of ₹2,643 is intact. Also, the 21-day moving average has crossed the 55- and 100-day moving average and is on the verge of crossing over the 200-day moving average, which is a bullish signal. A rise to test the crucial ₹3,000-₹3,075 resistance zone is likely in the near term.

The positive indicators on the charts mentioned above leave a high possibility of the contract breaking above the ₹3,000-₹3,075 resistance zone in the coming days.

A strong break and a decisive weekly close above ₹3,075 will confirm the end of the strong downtrend that has been in place for more than a year since April 2016. In such a scenario, the soybean contract can surge to ₹3,300 and ₹3,375 thereafter.

But if the contract fails to breach ₹3,000-₹3,075, a range-bound move between ₹2,850 and ₹3,075 is possible for some time. The 21-week moving average at ₹2,850 is a key support to watch.

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