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Between June and September this year, the December futures contract of cottonseed oil cake (COCUDAKL) on National Commodity and Derivatives Exchange (NCDEX) witnessed a considerable fall in price. That is, it declined from about ₹2,000 levels to make a low of ₹1,766 in early September, losing nearly 12 per cent.
But then, the contract entered consolidation phase where it was largely oscillating between ₹1,780 and ₹1,900. Following this, it broke out of the resistance as it opened with a gap-up on Monday. This has opened the door for further strengthening and the possibility of a trend reversal, at least in the near-term, looks high.
Supporting the positive outlook, the daily relative strength index is showing a fresh uptick and has crossed over the midpoint level of 50. The moving average convergence divergence indicator on the daily chart, which is in the bullish zone, is hinting at a fresh build of upward momentum.
Traders can initiate fresh long positions in the contract with stop-loss at ₹1,850 and look for a potential target of ₹2,250.
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