Stocks

MCX-Natural Gas: Bull might regain strength

Akhil Nallamuthu BL Research Bureau | Updated on September 08, 2020 Published on September 09, 2020

The September futures contract of natural gas in Multi Commodity Exchange (MCX) started to rally in mid-July and since then, it has garnered nearly 40 per cent as it moved from about ₹135 to the current market level of around ₹190.

In fact, the contract marked a high of ₹203 before a couple of weeks. But it was unable to move beyond the ₹200-mark decisively and it has gradually moderated from that level.

Looking at the daily chart, the contract appears to be consolidating within ₹180 and ₹190 for the past one week. But since the price is above ₹180, the contract will be inclined to uptrend.

The indicators are now showing a loss in upward momentum. The daily relative strength index has come off from its peak and is hovering in the neutral region. The moving average convergence divergence indicator in the daily chart is in downward trajectory. However, it remains in the positive region.

 

In case if the contract breaches ₹190, it can open more room on the upside. Above ₹190, it is highly likely that the contract will retest the prior high of ₹203. A breakout of that level can take the contract to ₹210. But if the contract slips below the support at ₹180, the near-term outlook will turn bearish wherein the price could drop to ₹168. Subsequent support is at ₹156.

Globally, the price of natural gas in New York Mercantile Exchange (NYMEX) has been in an uptrend since late June. But for the past few trading session, the contract has been hovering around the important level if $2.5. Nevertheless, the trend is bullish, and the price is likely to go higher from here.

Trading Strategy

The contract of natural gas in MCX has been moving sideways for the past few trading sessions. But the overall trend is inclined to bullish. Hence, traders can go long in the contract with stop-loss at ₹175.

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Published on September 09, 2020
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