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The futures contract of cottonseed oilcake (COCUDAKL) on the National Commodity and Derivatives Exchange (NCDEX), that had a good run in the last 12 months, might have a tough time going ahead at least in the near-term.
As the rally started to lose steam and utilising the weakness of the bulls, sellers are making an attempt to take advantage of the trend.
Even though the contract was crawling in a sideways trend between ₹2,000 and ₹2,200 in December and January, it broke out of the range in early February.
This was followed by the contract marking a fresh one-year high of ₹2,364 in mid-February.
However, the rally did not sustain and the uptrend turned fragile.
Thus, the contract has been on a decline since the beginning of the current week and it breached the support at ₹2,265 on Wednesday.
Substantiating the weakness, the daily relative strength indicator is showing a sharp downtick and the moving average convergence divergence indicator has turned its trajectory southwards.
The average directional index, which shows the strength of a trend, indicates that the bulls are losing out to the bears.
Considering the above factors, traders can sell March futures of NCDEX-COCUDAKL with stop-loss at ₹2,300.
The price is likely to drop towards the support band of ₹2,100 and ₹2,125.
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