The Guar Seed traded on National Commodity & Derivatives Exchange (NCDEX) rose ₹126 or almost 4 per cent to trade at ₹3,298 a quintal on Tuesday. The contract breached a key resistance at ₹3,200 on this session. The short-term outlook is bullish . Traders with a short-term horizon can consider buying it (Symbol-Guarseed10) at current levels.
Since encountering a key resistance at ₹5,400 in May 2015, the contract has been in an intermediate-term downtrend. However, the contract found support after recording a new low of ₹2,912 in February 2016 . Significant support is in the band between ₹2,910 and ₹3,000. This base zone has provided support in early March and again in mid of May and June. The contract has been on a short-term uptrend since taking support in mid-June. While trending up, the contract has conclusively breached its 21 as well as 50-day moving average last week. Further, on Tuesday’s 4 per cent rally has strengthened the short-term uptrend.
The daily relative strength index has entered the bullish zone from the neutral region. Moreover, the daily moving average convergence divergence indicator that is moving inline with the contract has also entered the positive terrain from the negative implying upward momentum. Traders with a short-term perspective can make use of the corrective declines to buy the contract while maintaining a stop-loss at ₹3,140 levels. Targets are ₹3,400 and ₹3,450 in the short term. Strong rally beyond ₹3,450 can take the contract northwards to ₹3,600 in the medium term. On the other hand, a conclusive fall below the immediate support at ₹3,100 can pull the contract down to ₹3,000 and ₹2,912 in the short term.