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Faced with considerable selling pressure, the November futures contract of natural gas on Multi Commodity Exchange (MCX), which was oscillating between ₹235 and ₹250, breached the support of ₹235 last week. What followed was a sharp decline where it broke below the support of ₹225 and registered a low of ₹210.1 on Monday.
By posting loss on Monday, the contract has lost in six straight trading sessions, indicating good bearish momentum. Supporting the same, the price slipped below both 21- and 50-day moving averages last week, and the daily relative strength index is now below the midpoint level of 50. Moreover, the moving average convergence divergence indicator on the daily chart has entered the bearish zone and charting a downward trajectory.
Further decline can drag the contract towards the psychological level of ₹200. If this support is breached, price could decline to ₹190. But if the contract strengthens from current level, it can face a strong hindrance at ₹225.
Since the contract looks weak on charts, traders can sell it on rallies with stop-loss at ₹225.
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