The Natural Gas futures contract on the Multi Commodity Exchange (MCX) made a high of ₹203.4 per mmBtu on May 29 and reversed lower to make a low of ₹193.9 per mmBtu on June 6.

However, the contract has bounced back and is currently trading at ₹201 per mmBtu. The upward movement over the last few days signals that the corrective fall has come to an end. It also indicates that the overall uptrend that has been in place since February is intact.

Outlook

The bullish outlook remains intact for the MCX-Natural Gas futures contract. The recent corrective fall from ₹203.4 to ₹193.9 indicates the formation of a flag pattern on the chart. This is a bullish continuation pattern that signals the overall uptrend is likely to remain intact.

An immediate resistance is at ₹203.5, which is likely to be tested in the near term. A strong break above this hurdle will take the MCX-Natural Gas futures contract higher to ₹208 in the short term. But, a pull-back from ₹208 can trigger an intermediate corrective fall to ₹203. An eventual break above ₹208 will boost the momentum. Such a break will increase the likelihood of the contract targeting ₹215 or ₹217 over the medium term.

Traders with a medium-term perspective can go long at current levels and also accumulate on dips at ₹199 and ₹197. A stop-loss can be placed at ₹193 for the target of ₹216. Revise the stop-loss higher to ₹205 as soon as the contract moves up to ₹207.

Key supports are at ₹195 and ₹193. The outlook will turn negative only if the contract breaks below ₹193. The ensuing targets are ₹190 and ₹188. But such a strong break below ₹193 looks less probable at the moment.

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

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