Cottonseed oilcake (COCUDAKL) futures have been displaying a wide trading range between ₹2,280 and ₹2,830 since May of the previous year. Although there was a brief surge above ₹2,830 in early 2023, this upward movement was short-lived, with the contract soon retreating below this level. The resistance at ₹2,830 has consistently proven to be a significant barrier.
However, in early August of this year, the contract found support at ₹2,280 and initiated a bullish rally. Nonetheless, it encountered resistance at ₹2,900 and has since retraced, and is currently trading around ₹2,590. It appears that the contract may potentially decline to the next support level at ₹2,450, with the possibility of extending further down to ₹2,280.
On the flip side, should cottonseed oilcake futures manage to recover from their current level, they are likely to encounter hurdles at ₹2,800 and ₹2,900.
Trade Strategy
Back on September 12, we recommended entering a fresh short position at ₹2,830 and setting a stop-loss at ₹3,000. Given the contract has declined to ₹2,590, we advise maintaining this trade, but adjusting the stop-loss to ₹2,800.
If the contract falls to ₹2,550, tighten the stop-loss to ₹2,680. We suggest booking profits when the contract reaches ₹2,450.