Castorseed futures on the National Commodity and Derivatives Exchange (NCDEX) was facing resistance at ₹6,675 in 2021. A couple of attempts it made, one in August and another in October, were in vain as it could not breach this resistance decisively.

Nevertheless, the recent rally, which began on the back of the support at ₹5,775 in January this year seems to possess good strength as the contract has rallied past the key hurdle of ₹6,675 last week. Therefore, castor seed futures is set to witness more gains over the medium-term.

Substantiating the positive outlook, RSI and MACD on the daily chart are bullish. The most active contract i.e., March expiry has seen steady accumulation of open interest along with the price rise. It stood at 24,120 contracts on Monday as against 7,730 contracts a couple of weeks back.

Therefore, the contract is likely to move beyond ₹7,000-mark and touch ₹7,580 over the medium-term. Although, before breaking out of ₹7,000, a corrective decline to ₹6,675 is expected. Note that a break below this level can turn the short-term trend bearish. Meaning, a rally to ₹7,580 can be delayed.

Considering the above factors, traders can buy at current level of ₹6,900 and accumulate more longs if price dips to ₹6,675. Initial stop-loss can be at ₹6,525. Revise it upwards to ₹6,750 when the contract breaks out of ₹7,000. When the contract reaches ₹7,300, exit one-third of the longs and then tighten the stop-loss to ₹7,000. Liquidate the remaining longs at ₹7,580.

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