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Guar seed futures on the National Commodity and Derivatives Exchange (NCDEX) have been charting a sideways trend since March – the continuous contract has been largely oscillating between ₹5,450 and ₹5,800.
A couple of weeks ago, the contract took support at the range bottom at ₹5,450 and rallied. It is now trading at ₹5,730 and thus hovering around the range top of ₹5,800. Notably, the guar seed futures marked a high of ₹5,826 early this week.
In the past two months, the contract has considerably struggled to surpass the resistance at ₹5,800, showing that it is a strong one. Moreover, the daily candlesticks, since the beginning of this week, hints at sellers coming in at around ₹5,800 levels. Thus, we expect the contract to fall from the current level of ₹5,730. It could decline back to the range bottom at ₹5,450 in the short-term.
Given the above factors, we recommend traders maintain a bearish bias.
Trade strategy
Initiate fresh short positions on guar seed futures at the current level of ₹5,730 and add more shorts if price goes up again to ₹5,800. Place initial stop-loss at ₹5,925.
Alter the stop-loss to ₹5,725 when the price falls below ₹5,600. Book profits at ₹5,500.
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