The futures contract of mustard seed on the National Commodity and Derivatives Exchange (NCDEX) has been in an uptrend since March last year. Consequently, the February futures contract registered a high of ₹5,900 in early November.

The contract which saw a decline from that level, after making a low of ₹5,260, started to move up again. This time it made a fresh high of ₹6,200 a couple of weeks ago.

However, unable to rally beyond ₹6,200, the contract reversed direction abruptly and saw a sharp fall in price. The bears then dragged the contract southwards and on Monday, the price slipped below the important support of ₹5,500. With that, the contract has confirmed a bearish flag pattern, indicating continuation of the downswing in upcoming sessions.

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Moreover, the relative strength index and the moving average convergence divergence indicators on the daily chart has entered their respective bearish territory. Also, the price has gone below both 21- and 50-day moving averages and the average directional index shows good build up in bear strength.

Hence, the contract is likely to extend the fall and will probably break below the nearest support of ₹5,260. Below this level, supports can be spotted at ₹5,100 and ₹5,000. Given the above factors, traders can initiate fresh short positions with stop-loss at ₹5,600.

Notable resistances from the current levels are at ₹5,500 and ₹5,700.

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