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The castor seed futures on the National Commodity and Derivatives Exchange (NCDEX) was oscillating between ₹6,900-7,600 since March last year. But a couple of weeks back, the contract broke below the support at ₹6,900, turning the outlook bearish.
The contract, currently trading around ₹6,435, has its nearest notable support at ₹6,000. Subsequent support is at ₹5,830. However, it might see a minor rally from the current level towards ₹6,900 before falling towards the above-mentioned support levels.
Until the contract trades below ₹6,900, the outlook remains bearish.
Trade strategy
Participants can consider going short at the current level of ₹6,435. Add more shorts when the contract rallies to ₹6,800. Place initial stop-loss at ₹7,000.
When the contract falls below ₹6,250, with or without triggering the sell at ₹6,800, revise the stop-loss to ₹6,450. Exit the shorts at ₹6,000 as the contract may bounce from the support band of ₹6,000-5,830.
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