Guar seed futures (continuous contract) on the National Commodity and Derivatives Exchange (NCDEX) has been on a downtrend since August last year. The contract faced a resistance at ₹6,400 and then started to decline.

Last week, the contract closed at ₹5,277. Guar seed futures is now trading near a strong base of ₹5,150. Most likely, it might decline to ₹5,200 from the current level and then establish a rally. This potential uptrend can lift the price to ₹5,700.

The price band of ₹5,700-5,800 is a resistance band. If these levels are breached, guar seed futures could head towards ₹6,400. But before the breakout, the contract might see a corrective decline after reaching the ₹5,700-5,800 range.

On the other hand, if guar seed futures closes below ₹5,150 on a daily basis, it could see another downswing, possibly to ₹4,600.

Trading strategy

Buy guar seed futures if it dips to ₹5,200. Place stop-loss at ₹4,950. When the contract rallies above ₹5,500, tighten the stop-loss to ₹5,350. Book profits at ₹5,700.