The price of cottonseed oilcake, a by-product obtained after the extraction of oil from cottonseed, has been on the rise since June this year. The cottonseed oilcake futures contract, traded on the National Commodity and Derivatives Exchange Ltd (NCDEX), has surged some 22 per cent from the June low of ₹1,465 a quintal. The contract is in a strong uptrend. The rally is expected to extend further. That offers a good opportunity to traders for entering fresh long position in this contract.

Short-term view

The short-term outlook for the NCDEX-cottonseed oilcake futures contract is bullish. The price action on the chart between mid-July and mid-August suggests a formation of a rounding continuation pattern. Key short-term support for the contract is at ₹1,730. While the contract trades above this level, the bullish outlook will remain intact. A rally to ₹1,850 looks likely. Traders with a short-term perspective can go long with a stop-loss at ₹1,720 for the target of ₹1,830. Intermediate declines to ₹1,750 can be used as a good opportunity to accumulate more long positions.

The short-term outlook will turn negative only on a strong break below ₹1,730. Such a break can drag the NCDEX-cottonseed oilcake contract lower to ₹1,650.

Medium-term view

The medium-term outlook is also bullish for the contract. It was trading in a bull channel from October 2013. A bullish breakout of this channel was witnessed in June this year. Ever since the breakout, the channel line is serving as a good support level for the contract. This support level is currently at ₹1,670. There is no immediate danger of a fall as long as the contract trades above this level. A rally to ₹1,900 looks likely. Traders with a medium-term perspective can go long with a wide stop-loss at ₹1,650 for the target of ₹1,900.

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

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