The continuous futures contract of cottonseed oilcake (COCUDAKL) on the National Commodity and Derivatives Exchange has rallied from about ₹1,800 in early November last year. The contract has carried over thetrend to 2021 and gained steadily untilMarch last week. After marking a high of ₹2,889, the futures began moving downhill.
The decline was sharp wherein the contract dropped to ₹2,411 within a couple of weeks. That is, the contract lost nearly 17 per cent. But ₹2,400 being a support, the fall was arrested following which the contract entered brief consolidation phase. Notably, the contract has been consistently bouncing off the 21-day moving average support, which coincided at ₹2,400 before a week. On the back of this, the contract started to gain momentum resulting in the bulls lifting the futures above the resistance of ₹2,700. Also, it broke out of the prior high of ₹2,889 on Monday with considerable volume and closed above ₹3,000-mark, a positive signal. Further, the average directional index (ADX) is showing a strong uptrend. Hence, one can consider taking fresh long positions in futures (July expiry) with stop-loss at ₹2,920. Potential near-term target can be ₹3,160. Above this level, it can touch ₹3,200.