Sell guarseed July contracts with stop loss at ₹4,200

Akhil Nallamuthu BL Research Bureau | Updated on June 09, 2021

The price dropped from around ₹3,980 to ₹3,720 levels, depreciating by about 6.5%

The continuous contract of guarseed futures on the National Commodity and Derivatives Exchange (NCDEX) had declined in February and March this year. The price dropped from ₹3,980 to ₹3,720 levels, depreciating by about 6.5 per cent.

However, in April, the contract gained upward momentum. Before a month, it marked a high of ₹4,370. But the price action since early 2019 shows that the contract has been unable to go beyond the band of ₹4,350-4,430. This resistance band continues to stay valid as the contract got pressured by this band again and it looks set to drop further. The last time the contract hit this level was in October 2020, before prices slid to ₹3,800 levels.

Corroborating the bearish bias, the relative strength index (RSI) and the moving average convergence divergence (MACD) indicators on the daily chart are moving downwards. RSI has slipped below the mid-point level of 50 and the MACD is set to enter the bearish zonw. The average directional index shows that bears have been gaining upper hand and appear stronger than bulls. Considering these factors, traders can sell the contract. Instead of June series, traders can sell July contract with stop-loss at ₹4,200 for a target of ₹3,850.

Published on June 09, 2021

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