The price of castor seeds has been on the decline over the past couple of months. Consequently, the futures price saw a drop. Currently, the April expiry futures contract trades around ₹6,415.
Although the recent trend has been bearish, the contract is now trading near a long-term trendline support. It coincides with another support at ₹6,300. So, there is a good chance that the contract will see a bounce from the current level.
Nevertheless, from the trading perspective, a rally past ₹6,670 can be a confirmation of the resumption of the uptrend. In such a case, it can rally to ₹7,000, from where we might see a minor correction. But then, the contract is expected to resume the up-move, cross the ₹7,000-mark and appreciate to ₹7,500.
Also read: India’s castor output seen 15% higher at 19.46 lakh tonnes for 2022-23
On the other hand, a break below the trendline can result in a sell-off, which can drag the contract to ₹5,870 quickly.
But as it stands, traders can be positive on castor seeds on the back of support around which it is trading now.
Trade strategy
Stay on the fence and go long when castor seed futures break out of ₹6,670. Keep the stop-loss at ₹6,400 at first.
When the contract rallies past ₹7,000, lift the stop-loss to ₹6,800. Tighten the stop-loss to ₹7,100 when the caster seed futures touch ₹7,250. Exit the longs at ₹7,450.