Castor seed futures on the National Commodity and Derivatives Exchange (NCDEX) is now facing a strong resistance between ₹7,300 and ₹7,500. This price band has been blocking the contract since early March.

Prolonged consolidation around the current level can result in the bears gaining ground. Affirming the presence of selling in this region, several candlesticks on the daily chart are with bigger upper wick. Therefore, the likelihood of a fall from here is high.

Although, from the current level of ₹7,300, the contract could rise to ₹7,450 before slipping below ₹7,150. On the downside, the contract could decline towards the price band of ₹6,900-6,930.

Note that this is an important support and a break below this level can turn the short-term trend negative. Support below ₹6,900 can be spotted at ₹6,650.

Given the above factors, traders can initiate fresh short position at the current level of ₹7,300 and add more shorts when the contract rallies to ₹7,450 so that the average sell price will be around ₹7,375.

Keep initial stop-loss at ₹7,610. Revise this down to ₹7,410 when the contract falls below ₹7,150. Liquidate all the shorts at ₹6,930 because as discussed earlier, it is a key level. Also, the 38.2 per cent Fibonacci retracement level of the prior rally coincide at this level, making it a significant support. So, there could be a bounce off this level.