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The October futures contract of natural gas in the Multi Commodity Exchange (MCX), that began trending up from about ₹180 in early August, marked a fresh high of ₹221 in the first week of September.
The contract then reversed the trend and witnessed a sharp fall, giving up most of the gains recorded in August. Following this, the contract again made a failed attempt at rising last week, when it reversed from the resistance level of ₹216. It is currently hovering around the important level of ₹200.
Since the price is trading below the 21-day moving average (DMA), the outlook is bearish and a break below ₹200 can intensify the sell-off. Corroborating the same, the daily relative strength index is showing a fresh downtick and it is now below the midpoint level of 50.
Since the contract is inclined to downtrend, traders can short with a stop-loss at ₹210. While the nearest support is at ₹195, this level can be breached, and the price could drop to ₹187. On the upside, the resistance levels are at ₹208 and ₹216.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading
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