The unusually cold winter in the US this year took the natural gas futures contract price traded on the Multi Commodity Exchange of India (MCX) to a high of ₹402.7 per mmBtu in February.

However, the contract has tumbled 37 per cent from its high to a low of ₹253.4 in March. Since then, the MCX natural gas futures contract has been moving higher.

Traders can consider taking a long position in the contract at this juncture.

Short-term view: The recent uptrend from the low of ₹253.4 has begun from just above the 200-day moving average. The contract is also moving in an upward moving bullish channel.

Immediate supports for the contract are at ₹284.7, the 100-day moving average and then ₹283.

While the contract trades above these supports, the probability of a rally towards ₹301-302 remains high. Short-term traders can go long with a stop-loss at ₹282, looking at a target of ₹301. Initial signals of a short-term trend reversal will emerge only if the contract records a strong close below 283.

Medium-term view: The medium-term trend is also up. The channel support at ₹280 is a key level to watch.

As long as the contract trades above this level the outlook will remain bullish.

A rise to ₹310 is possible in the coming weeks. Traders with a medium-term perspective can go long with a wide stop-loss at ₹278. Target can be placed at ₹309.

Key medium-term resistance is at ₹310.4 which is the 38.2 per cent Fibonacci retracement level. An intermediate pull back to ₹300 and ₹290 from this resistance cannot be rule out.

But the view will continue to remain positive and the outlook would turn bearish only if the contract declines below ₹280.

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