Castor seed futures on the National Commodity and Derivatives Exchange (NCDEX) have been in a downtrend since the beginning of the year. They slipped below a key level at ₹7,000 in mid-February, after which the fall accelerated. Towards the end of May, the contract reached a low of ₹5,314.

Backed by support at ₹5,300, the contract rebounded. However, after testing the barrier at ₹6,500 last week, castor seed futures softened and are currently trading at ₹6,160.

It’s important to note that the trend will remain bearish until the resistance at ₹6,500 holds. Therefore, although ₹6,100 can be considered a support level, the probability of the contract declining below this is high. In such a scenario, the price might fall to ₹5,400.

Conversely, if the resistance at ₹6,500 is breached, the price might rally to ₹7,000 quickly.

Trade strategy

Given that ₹6,100 is acting as a support, traders can adopt a cautious approach for now and consider selling castor seed futures once it breaks below this level. An initial stop-loss should be placed at ₹6,420.

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If the contract drops below ₹5,800, it’s advisable to revise the stop-loss down to ₹6,020. Further tighten the stop-loss to ₹5,800 if the price falls to ₹5,600. Profits can be booked at ₹5,500.

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