Commodity Analysis

Uptrend is intact in NCDEX cotton seed oilcake

Gurumurthy K BL Research Bureau | Updated on January 02, 2019 Published on January 02, 2019

Cotton Seed Oilcake prices have been on a strong uptrend since the last week of April. The Cotton Seed Oilcake futures contract on the National Commodity and Derivatives Exchange (NCDEX) made a low of ₹1,166 per quintal on April 30 and has reversed sharply higher. It surged to test ₹2,000 in November and has come-off from there.

It is currently trading at ₹1,922 , up about 65 per cent from the April low.

Outlook

The outlook for the contract is bullish. The uptrend that has been in place since April 2018 remains intact. The corrective fall from the November high of ₹2,043 took support from the 100-day moving average last week.

The contract made a low of ₹1,807 on December 24 and has bounced higher from there again.

Near-term resistance is in the ₹1,980-2,000 region which is likely to be tested in the coming weeks. A strong break and a decisive close above ₹2,000 will bring fresh momentum to the contract. Such a break will take the contract higher to ₹2,150 and ₹2,170 in the coming weeks. It will also mean a high possibility of the contract revisiting ₹2,300 levels over the medium-term.

The outlook will turn negative only if the contract declines below ₹1,800 decisively. The next target is ₹1,700. But such a strong fall breaking below ₹1,800 looks unlikely at the moment.

Trading strategy

Traders with a medium-term perspective can go long at current levels and also accumulate on dips at ₹1,850. A stop-loss can be placed at ₹1,750 for the target of ₹2,250.

Revise the stop-loss higher to ₹1,970 as soon as the contract moves up to ₹1,995.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading

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