The Crude Palm Oil (CPO) continuous futures contract on the Multi Commodity Exchange of India (MCX) has advanced 0.8 per cent on Monday and trades at around ₹1,049 per 10 kg.
Since the contract took support at around ₹570 in early May 2020, it has been on an intermediate-term uptrend forming higher peaks and higher troughs.
While trending up, the contract surpassed a key resistance at ₹835 in early November 2020 and continued to trend upwards. The contract found support at ₹900 in this January and resumed its uptrend after a near-term corrective decline.
It has been in a short-term uptrend since then. Recently, the contract surpassed the psychological resistance level of ₹1,000 and extended the upmove.
As long as the contract trades above the key base level of ₹1,000 it will remain positive.
However, with the decline in daily volume over the past two weeks and the weekly relative strength index showing signs of negative divergence a near-term corrective decline could be on the cards.
Traders should tread with caution in the near term. A fall below ₹1,000 can pull the contract down to ₹949 and then to ₹900 over the short-term. But an upward bounce from ₹1,000 can keep the contract moving sideways for some time.
A strong rally above ₹1,060 can take the contract higher to ₹1,075 or ₹1,080 levels.