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Since beginning of September, the November futures contract of natural gas in Multi Commodity Exchange (MCX) has been treading in a broad range between ₹225 and ₹245. Last week, the contract broke out of ₹245 but retracted back below that level, making it a false breakout. So, the bulls seem to be struggling to establish an uptrend.
But there are few positive signs for the contract. The price is above the 21-day moving average and the daily relative strength index is above the midpoint level of 50. Also, the moving average convergence divergence indicator in the daily chart lies in the positive territory.
On the back of this, if the contract rallies and cross over the resistance of ₹245, it can advance to ₹253. Above this level, it can possibly appreciate to ₹260. But if the contract breaks below ₹235, it will most likely drop to ₹225.
Though the contract is trading with a bullish bias, it has a considerable resistance at ₹245. Hence, traders can go long above ₹245 with stop-loss at ₹230.
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