Agri Business

MCX Natural Gas reinforces its uptrend; weaker rupee supports price

Gurumurthy BL Research Bureau | Updated on May 15, 2018 Published on May 15, 2018

The Natural Gas prices are on fire over the last few weeks. The Natural Gas futures contract on the Multi Commodity Exchange (MCX) made a low of ₹181.1 per mmBtu on May 3 and has reversed sharply higher from there. The contract has surged over 6 per cent from this low and is currently trading at ₹193.

Weakness in rupee has aided additional support in pushing the MCX contract higher over the last few weeks. The uptrend that has begun in February remains intact and indeed has gained momentum in the recent times.

Outlook

The outlook for the MCX Natural Gas futures contract remains bullish. The 21-day moving average at ₹184 has been providing a strong support and limiting the downside for the contract over the last couple of weeks. The contract has also risen decisively breaking above the 200-day moving average resistance which is poised at ₹186.

An immediate support for the contract is at ₹190. Next significant short-term support is in the band between ₹185 and ₹183. A fall below this support zone is unlikely at the moment.

A near-term resistance is at ₹196 which is likely to be tested in the coming days. Inability to break above this hurdle can trigger a near-term pull-back move towards ₹190. But an eventual break above ₹196 will boost the momentum and will take the contract higher to ₹204 or ₹205. Further break above ₹205 will see the upmove extending towards ₹208 thereafter.

Traders with a medium-term perspective can go long at current levels and also can accumulate at ₹191 and ₹187. Stop-loss can be placed at ₹186 for the target of ₹204. Revise the stop-loss higher to ₹195 as soon as the contract moves up to ₹199.

The bullish outlook will get negated only if the contract declines below ₹183. Such a break, can drag the contract lower to ₹180 or even lower.

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

Published on May 15, 2018
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