Cotton Seed Oilcake prices have been inching higher over the last few months.
The Cotton Seed Oilcake futures contract on the National Commodity and Derivatives Exchange (NCDEX) hit a low of ₹1,365 a quintal in August and has reversed higher from there.
It is currently trading at ₹1,590. A pick-up in the spot demand and the restricted supplies have supported the price recovery.
This recovery rally, which began in August, is signalling the end of the long-term downtrend since September 2016.
On the charts, there appears room for prices to move up further in the coming weeks.
OutlookBefore the latest up-move, prices were on a strong long-term downtrend. The prices had almost halved after hitting a high in September 2016. The NCDEX – Cotton Seed Oilseed futures contract tumbled about 51 per cent after a high of ₹2,771/quintal in September 2016 to record a low of ₹1,365 in August this year. The reversal from this low is technically important as it has happened from a key long-term base level of ₹1,400.
The strong break above ₹1,550 earlier this month has strengthened the up-move that started in August. A cluster of supports in the ₹1,550-1,520 region nixes the possibility of the contract falling below ₹1,500 again. Near-term dips to the ₹1,550-1,520 support zone may find fresh buyers coming into the market. As long as the contract trades above ₹1,520, a rally to ₹1,700 or ₹1,750 is likely in the coming weeks.
Traders with a medium-term perspective can go long on dips at ₹1,555. Stop-loss can be placed at ₹1,490 for a target of ₹1,675. Accumulate longs at ₹1,530. Revise the stop-loss higher to ₹1,575 as soon as the contract moves up to ₹1,605.
The bullish outlook will get negated only if the contract declines below ₹1,500 decisively. Such a break can pull the contract lower to ₹1,470 or ₹1,450.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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