The price of castor seed started to fall in mid-January this year. Consequently, the futures contract of castor seed on the National Commodity and Derivatives Exchange (NCDEX), fell off the resistance at ₹7,600 in the third week of January.
The downswing extended, resulting in the breach of a key base at ₹6,850 by mid-February. This confirmed a bear trend and dragged the contract further. The contract is currently hovering around ₹6,136.
The price action continues to show bearish bias and as it stands, the probability of the contract falling below ₹6,000 is high. Notable support from the current level is at ₹5,780.
For the contract to turn the trend bullish, it should decisively break out of ₹6,600. Until then, we recommend traders to opt for short positions.
Trade strategy
We had suggested to take short positions at ₹6,180 three weeks back. Stop-loss for this trade is at ₹6,420. Traders who hold this trade can retain it.
If the contract falls from here and slips below ₹5,900, tighten the stop-loss to ₹6,020. Book profits at ₹5,780.