NCDEX cottonseed oilcake (₹1,406/quintal): Buy

Gurumurthy K BL Research Bureau | Updated on December 16, 2014 Published on December 16, 2014


Cottonseed oilcake, by product obtained after the extraction of oil from cottonseed, seem to be enjoying a good rally this year.

Cottonseed oilcake futures traded on the NCDEX has reversed sharply from the low of ₹1,324 a quintal recorded on December 1. The contract is up over 6 per cent from this low and is currently at ₹1,407.

The outlook for the contract is bullish and the current rally is expected to extend in the coming weeks as well.

This provides a good opportunity for short-term traders to initiate fresh long positions.

Short-term view: The short-term outlook is bullish for the cottonseed oilcake. The recent rally over the past two weeks helped the contract breach its key short-term resistance level of ₹1,390.

The contract is also now poised above the psychological ₹1,400 level. Series of supports are available for the contract at ₹1,402 – the 200-week moving average, ₹1,390 – resistance-turned-support and ₹1,380 – a trendline support level.

These supports are likely to limit any intermediate fall in the contract.

As long as the contract trades above these support levels, the bullish outlook will remain intact. A rally to ₹1,450 is possible in the short-term.

Traders with a short-term perspective can go long at current levels.

Stop-loss can be placed at ₹1,375 for the target of ₹1,450. Intermediate declines to ₹1,390 and ₹1,380 can be used to accumulate more long positions.

The short-term outlook will turn negative if the contract declines below ₹1,380. The ensuing target on such a break will be ₹1,350.

Medium-term view: The medium-term view is also bullish for the cottonseed oilcake.

The contract has consolidated between ₹1,300 and ₹1,370 all through November and has formed a strong base. The eventual breakout above ₹1,370 in December reflects strength on the charts.

Key supports for the contract are at ₹1,350 and ₹1,300. The contract can rise to ₹1,500 in the medium-term.

A break below ₹1,350 will be the first sign of weakness, and the contract can fall below ₹1,300.

A strong break below ₹1,300 will turn the outlook bearish and will take the contract lower to ₹1,250.

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

Published on December 16, 2014
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