The continuous futures contract of guar seed on the National Commodity and Derivatives Exchange (NCDEX) saw a decline over the past couple of weeks after facing the resistance at ₹6,400. It is currently hovering around ₹5,800 after marking a low of ₹5,650 last Friday.
The contract has a strong support at ₹5,680 which has been holding true since November last year. Notably, the contract has bounced off this support several times over the past few months. We expect the support to stay valid and we might see a bounce off this level in the coming days.
On the upside, the nearest resistance is at ₹6,100. Subsequent barrier is at ₹6,400 in two to three months.
In case the support at ₹5,680 is breached, the outlook will turn bearish where the price could drop to ₹5,350 – the nearest support. Next support is at ₹5,000.
Considering that the contract is trading above a strong support, traders can initiate fresh long positions at the current level of ₹5,800. Add more longs if the price dips to ₹5,680. Place stop-loss at ₹5,525.
When the contract rallies past ₹6,100, shift the stop-loss to ₹5,950. Further, tighten the stop-loss to ₹6,100 when the price goes above ₹6,250. Book profits at ₹6,400.
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