The futures price of chana on the National Commodity and Derivatives Exchange (NCDEX), after registering a high of ₹5,607 in early October last year, was on a decline and made a low of ₹4,317 in December. However, it bottomed in January this year and the price has been appreciating.

While the March series broke out of the key resistance at ₹4,700 before a couple of weeks, the contract was not able to extend the rally. A minor correction happened wherein the price inched down to ₹4,603 i.e., near the support of ₹4,600. On the back of this, the contract started to gain traction and as a result, it moved above ₹4,700 and even breached the resistance of ₹4,900 on Monday.

Thus, the bulls seem to regain momentum, opening the door for further strengthening. Supporting this argument, the daily relative strength index is now showing fresh uptick and is already in the bullish territory. The moving average convergence divergence indicator on the daily chart has entered the positive zone and is showing a build-up of fresh upward momentum. Also, the average directional index is showing that bulls are better placed to influencing the contract. Moreover, the 21-day moving average (DMA) has crossed over the 50-DMA, potentially indicating that the medium-term trend is shifting northwards.

Taking the above factors into account, traders can be positive and can go long on declines with stop-loss at ₹4,750. The contract can rally to ₹5,050.

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