Natural gas prices have been range-bound over the last few weeks. The Natural Gas futures contract on the Multi Commodity Exchange (MCX) has been stuck in a sideways range between ₹200 and ₹210 per mmBtu for the past three weeks.

The futures contract is currently trading at ₹205. Alhough the near-term outlook is mixed, and the contract may continue to remain range-bound, the broader view is bullish.

Positive outlook

The contract has vital support in the band between ₹200 and ₹195.

The downside is expected to be limited to ₹195 even if the contract breaks below the current range of ₹200. The bias will turn negative only if it breaks below ₹195 decisively.

But such a break looks less probable as the indicators on the charts have been giving positive signals.

The 21-week moving average is on the verge of crossing over the 100-week moving average.

This is a bullish signal indicating that the downside could be limited in the short-term.

As such, intermediate dips to ₹200 or ₹195 are likely to trigger fresh buying interest.

A strong break and a decisive close above ₹210 will boost the momentum and take the contract higher to ₹215 or ₹217 in the short-term.

Inability to breach the ₹215-₹217 resistance region can trigger a pull-back to ₹210 or ₹208.

However, the outlook will continue to remain positive. An eventual break above ₹217 will then increase the likelihood of the contract targeting ₹225 over the medium-term.

Trading strategy

Traders with a medium-term perspective can go long at current levels and also accumulate at ₹202 and ₹197.

A stop-loss can be placed at ₹193 for the target of ₹225. Revise the stop-loss higher to ₹207 as soon as the contract moves up to ₹213.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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