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The continuous futures contract of guar seed on the National Commodity and Derivatives Exchange (NCDEX) has been trading in a range since mid-November last year. That is, it has been oscillating in the range of ₹5,680 to ₹6,400.
Technically, until the contract exits this range, the next leg of trend will remain uncertain. If the contract slips below the support at ₹5,680, the near-term outlook will turn bearish and the price could decline to ₹5,285. On the other hand, if the contract breaks out beyond ₹6,400, we might see a rally towards ₹7,000.
Nevertheless, the guar seed futures is trading at around ₹5,730. Since it is hovering near the bottom of the range, the likelihood of a rally from here is high.
Trade strategy
Traders can go long at the current level of ₹5,730 with stop-loss at ₹5,525. When the contract touches ₹6,100, tighten the stop-loss to ₹5,750. Exit the long positions at ₹6,400, as this is a support level and we might see a decline from here.
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