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The futures contract of mustard seed on the National Commodity and Derivatives Exchange (NCDEX), which has been moving in a sideways trend since November last year, had its base at ₹4,900. While this acted as a strong support, the contract faced resistance at ₹5,200 and ₹5,320. The April contract, which moved out of this range in early February, rallied to ₹5,944 before three weeks and then it witnessed a minor correction. Looking at the price action over the past one month, the contract has been tracing a horizontal price pattern. That is, it was held between the key price levels at ₹5,570 and ₹5,950.
But on Monday, it breached the psychological level of ₹6,000 thereby strengthening the case for the bulls.
Traders can be positive and initiate fresh long positions in the contract on declines. Stop-loss can be placed at ₹5,750. On the upside, the contract is likely to touch ₹6,300 — a breakout of which can take the contract to ₹6,450. These price points can be the near-term target.
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