MCX-natural gas (₹291): BUY

Gurumurthy K BL Research Bureau | Updated on April 29, 2014 Published on April 29, 2014


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.

Published on April 29, 2014
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