Technical Analysis

Commodity Call: Buy cottonseed oilcake futures

Akhil Nallamuthu | | Updated on: Jan 04, 2022
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Go for fresh longs in cottonseed oilcake Feb futures at current level of ₹3,180

The continuous futures contract of cottonseed oilcake (COCUDAKL) on the National Commodity and Derivatives Exchange (NCDEX), which began its latest rally in mid-November 2021, breached the critical resistance at ₹2,635 towards the end of November. Post the breakout, it continued to rally and closed 2021 on a high as it breached the ₹3,000-mark.

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Bullish view

The contract has opened the current week on a positive note and is trading above ₹3,100. The contract appears to possess enough strength to stay above ₹3,000 and looks set to scale more heights. While the nearest expiry i.e., January is witnessing a drop in open interest (OI), the subsequent expiry i.e., February series, is seeing a healthy build-up in OIs along with price rally. This indicates that participants are rolling over their long positions even as price rallies — a strong positive indication. Also, there is no weakness on the charts, thus, one can hold a bullish view on the contract.

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Although a considerable number of days remain before January contract expires, traders can prefer February contract for fresh positions since there is ample liquidity and more time for expiry. Therefore, we recommend fresh longs in cottonseed oilcake February futures at current level of ₹3,180. Add more longs if price softens to ₹3,050 and place initial stop-loss at ₹2,950. Revise the stop-loss to ₹3,100 if the contract rallies past ₹3,250. Liquidate entire longs when the price rises to ₹3,350.

Published on January 04, 2022

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