MARKET DEVELOPMENT
MCX Crude Palm Oil: Buy
MCX Crude Palm Oil: Buy
13/01/2016 (Hindu Business Line) - Crude Palm Oil (CPO) futures contract traded on the Multi Commodity Exchange (MCX) has been in a short-term uptrend since taking support at ₹375 per 10 kg in late November 2015. While trending up, the contract decisively breached its 21 and 50-day moving averages. But, it now tests a key resistance around ₹415 which was earlier tested in early December 2015. The short-term trend is bullish and the contract can extend its upward journey in the coming weeks. Traders with a short-term perspective can consider buying the contract at current levels.
Short-term view: The short-term trend is up for the CPO contract. The daily relative strength index (RSI) is featuring in the bullish zone. The weekly RSI is currently in the neutral region and is heading towards the bullish zone. Moreover, the daily and weekly price rate of change indicator is featuring in the positive territory implying buying interest. The contract is currently testing a key resistance at around ₹415 with a positive bias.
Therefore, traders can make use of the minor correction to buy the contract with a stop-loss at ₹398 and trail it. Strong rally above ₹440 can take the contract northwards to ₹455 or even to ₹470 levels.
Medium-term view: In March 2014, the contract encountered a significant long-term resistance in the band between ₹610 and ₹620 and changed direction. Since then, the contract has been on a long-term downtrend. Breaking through key supports, the contract continued its decline and recorded a multi-year low at ₹351 in August 2015. Subsequently, the contract did a volte-face and started trending upwards after forming an island reversal pattern. The contract has been broadly on a short-term uptrend since late August 2015. Whenever, the contract gains with an upward gap there is a surge in open interest backing the uptrend which indicates long positions being built up.
The contract has a significant medium-term resistance at ₹440. An emphatic breakthrough of this resistance will have a potential to take the contract higher to ₹470 in the medium-term . But, to alter the long-term downtrend, the contract needs to conclusively break-out of the resistance at ₹490. Key medium-term supports are at ₹375 and ₹350.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
Short-term view: The short-term trend is up for the CPO contract. The daily relative strength index (RSI) is featuring in the bullish zone. The weekly RSI is currently in the neutral region and is heading towards the bullish zone. Moreover, the daily and weekly price rate of change indicator is featuring in the positive territory implying buying interest. The contract is currently testing a key resistance at around ₹415 with a positive bias.
Therefore, traders can make use of the minor correction to buy the contract with a stop-loss at ₹398 and trail it. Strong rally above ₹440 can take the contract northwards to ₹455 or even to ₹470 levels.
Medium-term view: In March 2014, the contract encountered a significant long-term resistance in the band between ₹610 and ₹620 and changed direction. Since then, the contract has been on a long-term downtrend. Breaking through key supports, the contract continued its decline and recorded a multi-year low at ₹351 in August 2015. Subsequently, the contract did a volte-face and started trending upwards after forming an island reversal pattern. The contract has been broadly on a short-term uptrend since late August 2015. Whenever, the contract gains with an upward gap there is a surge in open interest backing the uptrend which indicates long positions being built up.
The contract has a significant medium-term resistance at ₹440. An emphatic breakthrough of this resistance will have a potential to take the contract higher to ₹470 in the medium-term . But, to alter the long-term downtrend, the contract needs to conclusively break-out of the resistance at ₹490. Key medium-term supports are at ₹375 and ₹350.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.