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Witnessing buying interest, the continuous futures contract of natural gas on the Multi Commodity Exchange of India (MCX) jumped 7 per cent last week, mainly on the heels of a six per cent surge on Friday. It ended the past week at ₹242.8 per mmBtu.
The contract opened this week slightly in the negative territory at ₹241.9 and recorded an intraday low at ₹239.9 levels on Monday. The contract tests key resistance at ₹240. It trades well above the 21- and 50-day moving averages. In mid-March and early April this year, the contract took support at around ₹180 and began to trend upwards. Since then, the contract has been in a medium-term uptrend, forming higher peaks and higher troughs. Moreover, the short-term trend is also up for the contract. The daily as well as the weekly relative strength indices are featuring in the bullish zone, backing the uptrend.
Further, the daily and the weekly price rate of change indicators are hovering in the positive terrain implying buying interest. The contract now tests a resistance at ₹240 with a positive bias. But a significant long-term resistance is ahead at ₹250 that can temporarily limit the rally. Traders can continue to hold their long positions with a stop-loss at ₹232 levels and consider booking partial profit at ₹250 levels. Key supports below ₹230 are placed at ₹220 and ₹210 levels. Vital resistance above ₹250 is placed at ₹260.
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