Natural gas, which was in a sharp decline since early May, saw some relief towards the end of June, where it reversed the direction. As a result, the August futures contract of the commodity took support at ₹121 and moved up to ₹150.

Having failed to break out of ₹150, the contract started to decline and registered a low of ₹124.2 last week. Again, the contract is attempting to rally and is now trading at around ₹135 – its 21-day moving average.

Following the recent price rally, the daily relative strength index, though below the midpoint level of 50, is showing a fresh uptick. Similarly, the moving average convergence divergence indicator on the daily chart, which is below the zero-level, has been in an upward trajectory since last week.

While this is the second attempt of the contract to establish rally in the past one month, it still has an obstruction at ₹140. Above that level, ₹150 can be a considerable resistance. A breakout of ₹150 can potentially change the short-term outlook bullish and lift the contract to ₹160. On the other hand, if the price weakens from current level, the price area between ₹121 and ₹124 can act as a support band. A breach of ₹121 can intensify the sell-off, possibly dragging the price to ₹110.

On the global front, the generic first contract of natural gas on New York Mercantile Exchange (NYMEX) is rallying since last week by taking support at $1.62. Currently trading at $1.8, the contract has its nearest resistances at $1.85 and $1.9. The price should breach these levels in order to continue the uptrend.

Trade Strategy:

The contracts on MCX and NYMEX, which have been rising for the past one week, is trading near their respective resistance levels. So, traders can initiate fresh long positions in MCX-Natural gas with stop-loss at ₹128 if it breaches the hurdle at ₹140.

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