Castorseed futures contract traded on the NCDEX has been in a strong rally since September 12. The contract is up over 14 per cent since then and is currently trading at ₹4,540 a quintal.

Strong industrial demand for castor oil, especially from the paint industries ahead of the festive season, is driving the commodity price higher.

The uptrend remains intact and there is a strong possibility of the rally extending in the coming days. Short-term traders can consider taking long position in the contract.

Short-term view: The short-term outlook is bullish for the contract. The corrective fall from the high of ₹4,444 recorded on September 23 found support at ₹4,315.

The contract has reversed sharply higher from this level and is now trading strong above ₹4,500.

There is no immediate danger for a fall as long as the contract trades above ₹4,500. Key short-term support for the contract is at ₹4,470. Immediate resistance is at ₹4,600.

A strong break above this level will open the doors for a rally to ₹4,700 in the short-term.

Traders with a short-term perspective can initiate fresh long position at current levels. Stop-loss can be kept at ₹4,440 for the target of ₹4,700.

The outlook will turn negative if the contract declines below ₹4,470. Such a break can take the contract lower to ₹4,400.

Medium-term view: The medium-term outlook is also bullish for the contract. Key medium-term support is at ₹4,300.

The probability of a decline below this support level is low.

As such a rally to test the previous high of ₹5,054 recorded in December 2013 looks likely. Intermediate resistance is at ₹4,850.

Traders with a medium-term perspective can initiate fresh long positions now. Stop-loss can be kept wider at ₹4,210 for the target of ₹5,000.

The medium-term view will turn bearish if the contract falls below ₹4,300. The next target will be ₹4,000.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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