Commodities

MCX-Natural gas: Go long above ₹200

Akhil Nallamuthu BL Research Bureau | Updated on October 06, 2020 Published on October 06, 2020

The October futures contract of natural gas in the Multi Commodity Exchange (MCX), which has been falling since the past one month, registered a fresh four-month low of ₹179.1 last week. Since ₹180 is a considerable support, the price bounced off that level and is currently hovering around ₹196.

The contract has been witnessing higher volatility for the past couple of weeks, as indicated by increasing daily average true range.

The contract faces a substantial resistance at ₹200, where the 21-day moving average and the 50 per cent retracement level of the downtrend coincide. Notably, the relative strength index and the moving average convergence-divergence indicators in the daily chart lies in their respective bearish territories.

 

So, even though the contract shows signs of recovery, the price should decisively break out of ₹200 to establish a sustainable rally. A breakout of ₹200 can take the contract to ₹210 and then possibly to ₹220.

Considering the above factors, traders can buy the contract with stop-loss at ₹185 if the price breaks out of ₹200.

Note: The recommendations are based on technical analysis.

There is a risk of loss in trading

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Published on October 06, 2020
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