Guar seed futures (continuous contract) on the National Commodity and Derivatives Exchange (NCDEX) have experienced a significant surge for over two months, with the current price sitting at Rs. 6,150. This remarkable rally stemmed from strong support at Rs. 5,000, and it recently reached a peak of Rs. 6,623.
It’s crucial to note that this contract faces resistance levels at Rs. 6,400 and Rs. 6,660. Historically, it has struggled to break beyond these points, as demonstrated by its multiple attempts to breach the Rs. 6,400-6,660 price range since 2022. This resistance barrier has proven to be quite robust.
Considering these factors, we anticipate that guar seed futures will likely see a decline from the current level. While there is a minor support at Rs. 6,100, it’s probable that the contract will breach this and trend lower towards the support level of Rs. 5,750. Should this level be breached, it could potentially lead to a further drop, with the contract possibly falling to Rs. 5,500.
Alternatively, in the event that the contract manages to break out of the Rs. 6,660 resistance, it could embark on a swift rally, potentially reaching Rs. 7,150. However, at present, the likelihood of guar seed futures experiencing a price decline appears to be high.
We recommended initiating fresh short position at Rs. 6,325 last week. Retain this trade. But revise the stop-loss from Rs. 6,800 to Rs. 6,460.
Lower the stop-loss to Rs. 6,300 when the price falls below Rs. 6,000. Further tighten the stop-loss to Rs. 6,100 when the contract touches Rs. 5,900. Aim to book profits at Rs. 5,800.