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Last Updated : Aug 15, 2020 07:42 PM IST | Source: Moneycontrol.com

Super Trend gives sell signal, initiates short position in MCX Soybean September future

On the daily timeframe, NCDEX Soybean September has given a downward breakout from its 'Ichimoku Cloud' which signals that the bearish trend is intact.

Sumeet Bagadia


Sumeet Bagadia



NCDEX Soybean future had majorly traded mixed during the current month of July and August so far, owing to positive monsoon season, and higher sowing in Madhya Pradesh and Maharashtra. Moreover, there have also been reports of higher sowing in the United States by 5-10 percent and currently, the crop is blooming at 85 percent, higher compared to 68 percent of the corresponding period last year till mid-July.

However, prices remain supported from the lower levels, as China continued to buy US Soybean Futures to trade bearish, as sentiments in the domestic market continue to be favourable for a good crop this year with sowing having to be completed in the above states. This has brought cheers in the domestic market as Soybean sowing and yield are expected to witness incline by 15-20 percent compared to the last year 2019-20 in the major states of Madhya Pradesh, Maharashtra and Rajasthan.

Harvesting in the smaller regions of the above states is expected to begin by the first week of September onwards. Conversely, the price could also find support from the lower levels as the Central government is likely to raise import duties on vegetable oils such as soy oil, based on recent sources to make India more self-reliant. This could possibly reduce the imports of soy oil from the US, Argentina, Brazil, Indonesia and Malaysia, and eventually increase the demand for soybean crush in the domestic market.

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But then, domestic traders and industrialists have also pointed out the export demand for soybean meal from India has been lower in the last 2-3 months and is forecasted to be lower in August month which could cap any major upside movement in soybean prices as well.

Harvesting of soybean crops in the US is also expected to begin from September onwards which is also expected to pressure spot and future prices.

Overall, we expect a bearish trend in NCDEX soybean futures for the month ahead.

On the daily timeframe, NCDEX Soybean September has given a downward breakout from its “Ichimoku Cloud” which signals that the bearish trend is intact. Moreover, the price has closed below its 50 days and 200 days “Simple Moving Average” which suggests weakness in the counter. Furthermore, the price has been trading below its Parabolic SAR, which confirms bearish control.

soybean_aug15

Additionally, momentum indicator RSI (14) has breached below its 50 level which confirms negative momentum. Also, Super Trend (7, 1) has given a sell signal which confirms bearishness. So, based on the above technical structure one can initiate a short position in NCDEX Soybean (Sep) futures at CMP 3,700 or a rise in the price till Rs 3,750 level can be used as a selling opportunity for the downside target of Rs 3,300. However, the bearish view will be negated if NCDEX Soybean (Sep) closes above the resistance of Rs 3,910.

(The author is Executive Director at Choice Broking.)

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on Aug 15, 2020 07:40 pm
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