The June contract of guarseed futures on the National Commodity and Derivatives Exchange (NCDEX), after making a high of ₹4,432 before a couple of weeks, overturned the trend and started to move downwards.

Noticeably, the price band between ₹4,400 and ₹4,475 has been a strong resistance and it has stayed that way since November 2018. This shows how strong the hurdle is and now that the contract has reversed from these levels, the likelihood of a decline looks more.

The continuous contract of guarseed futures began 2021 on a sluggish note as it extended its sideways trend that has been in place since December last year. The contract was largely oscillating between ₹3,800 and ₹4,030. While it declined it March to a low of ₹3,713, slipping below the support of ₹3,800, the contract quickly turned upside. Following this, it established a rally which took the contract to the latest high of ₹4,432. However, as mentioned earlier, the contract is facing a substantial hindrance.

On the daily chart, indicators like the relative strength index and the moving average convergence divergence indicator, though remains in the positive territory, are showing signs of weakness. Also, the contract breached the support of ₹4,215 on Wednesday accompanied by considerable volume.

Traders can consider initiating fresh short positions with stop-loss at ₹4,315. The nearest notable support is at ₹4,035 where the 50 per cent retracement level of the previous trend coincides. This can be the short-term target.

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