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Castor seed futures on the National Commodity and Derivatives Exchange (NCDEX) has been on a steady fall since the beginning of 2023. It started to fall from the resistance at ₹7,600 in January.
The contract declined in the subsequent months and slipped below a key level of ₹5,830 in mid-May. However, after marking a low of ₹5,314 towards the end of May, the contract rebounded. It has now rallied to the resistance band of ₹5,830.
This upmove is likely to be a corrective rise within the broader downtrend. Therefore, we expect castor seed futures to see a fall in price from the current levels.
While ₹5,300 can be a support, since the overall trend is bearish and the momentum is in favour of the sellers, we anticipate a decline in price to ₹5,000. But note that if the contract rallies past ₹6,080, the trend will turn bullish where we could see the rally extending to ₹6,700.
Trade strategy
Sell castor seed futures on the NCDEX now at ₹5,930. Place stop-loss at ₹6,130.
When the contract slips below ₹5,570, modify the stop-loss to ₹5,800. Tighten the stop-loss further to ₹5,600 when the price falls below ₹5,315. Book profits at ₹5,050.
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