Comments
The September futures contract of natural gas on the Multi Commodity Exchange (MCX), that started to rally in mid-July, registered a high of ₹203 in the final week of August. But it was unable to move beyond the ₹200-mark decisively and started to moderate from that level.
Consequently, the contract breached the support of ₹180 and the 21-day moving average (DMA) last week, turning the outlook bearish. Currently hovering at ₹170, the contract has a key support at ₹168, where the 50 per cent Fibonacci retracement level of the prior rally and the 50-DMA coincide.
As the price has been in a decline over the past couple of weeks, the daily relative strength index has declined and fallen below the midpoint level of 50. Also, the moving average convergence-divergence indicator on the daily chart is in a downward trajectory and on the verge of entering the bearish territory.
Because of the prevailing bearish inclination, if the contract slips below the important level of ₹168, it will most likely descend towards the support at ₹155. Below that level, the support is at ₹145. On the other hand, if the contract gains traction and advance from here, it will face its first hindrance at ₹180. A breakout of that level can lift the contract to ₹195.
Globally, the price of natural gas on the New York Mercantile Exchange (NYMEX), which has been on an uptrend since late June, has witnessed a price correction from its recent peak of $2.74 to the current level of $2.3. Notably, $2.25 is a crucial support. If the price slips below this level, a deeper correction can be expected.
Trading Strategy
The contract on the MCX has been depreciating for the past two weeks and now tests an important support at ₹168. A break below this level can result in further correction. Hence, traders can sell the contract with stop-loss at ₹180 if price breaks below ₹168.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.