The breakout of the resistance at ₹6,440 in early April in guar seed futures on the National Commodities and Derivatives Exchange (NCDEX) turned out to be a false one as there was no follow-through rally. In fact, the contract made a U-turn and it has been on a decline since then. The bears have pulled down the price to the current level of ₹5,730.

However, ₹5,730 is a strong support. The guar futures has bounced off this level four times since September last year. Subsequent support is at ₹5,500. So, the price band of ₹5,500-5,730 is a solid base and have a good chance for the futures to rebound.

A rally can lift the contract to the nearest resistance at ₹6,100. A breakout of this level can take the futures to ₹6,400. The contract can appreciate to ₹6,400 in two to three months.

It should also be noted that a breach of ₹5,500 can turn the short-term trend bearish. The fall can be quick wherein the contract can tumble to ₹5,000.

As it stands, the support band of ₹5,500-5,730 holds true and on the back of this, one can consider fresh long positions.

Here is our trade recommendation – Initiate fresh longs at the current level of ₹5,730 and buy more when price corrects to ₹5,500. Place stop-loss at ₹5,420. When the contract touches ₹6,100 book half of your total longs and revise the stop-loss up to ₹5,850. Liquidate the remaining at ₹6,400.