The futures price of Chana on the National Commodity and Derivatives Exchange (NCDEX) was moving in a sideways trend i.e. largely oscillating between ₹4,050 and ₹4,300 in April-July period this year.

Following this, the contract started to gain momentum where it broke out of the range in mid-August and has been rallying since then. As a result, the December futures contract registered a fresh 52-week high of ₹5,703 in early October.

However, the bulls hit a roadblock resulting in a price correction. Now that the contract breached the support of ₹5,000 yesterday, the price action looks more in line with a downtrend rather than just a correction. A break of the key base of ₹5,000 has opened the door for further weakening.

Supporting the downward bias, the moving average convergence divergence indicator on the daily chart has slipped into the bearish zone. Also, the daily relative strength index has fallen deeper into the negative territory. Though it is fast approaching the over-sold territory, there are no signs of a bullish reversal.

Currently trading around ₹4,850 levels, the contract has a minor support at ₹4,830. Nevertheless, the selling pressure seems to be strong and the price is likely to decline towards the subsequent support at ₹4,645, where the 61.8 per cent Fibonacci retracement level coincides.

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