The Natural gas contract on MCX took support at around ₹121 in mid-June this year and changed direction. Since then, the contract has been in a short to medium term uptrend. While trending upward, it had decisively breached a crucial resistance at ₹150, by skyrocketing 17.7 per cent on Monday. This rally has strengthened the uptrend that has been in place since June low. Moreover, the contract had conclusively surpassed its 200-day moving average and now trades well above the 50- as well as 200-DMAs. The daily relative strength index has decisively entered the bullish zone from the neutral region and the weekly RSI is on the brink of entering the bullish zone. Further, the daily and the weekly price rate of change indicator are hovering in the positive terrain implying buying interest. With the bullish momentum, the contract has managed to move above the crucial resistance level of ₹160. It currently trades at ₹162, gaining 1.6 per cent on Tuesday.

Continuation of the uptrend can test resistance at ₹170 in the short term. An emphatic break above this barrier will reinforce the uptrend and push the contract northwards to ₹175 and then to₹180 levels over the medium term. Conversely, if the contract fails to sustain above the near-term base level of ₹160 can witness a corrective decline to ₹155 and then to ₹150. Next vital supports are at ₹144 and ₹140 levels.

On the global front, the generic first contract of natural gas on New York Mercantile Exchange (NYMEX) conclusive breached a key resistance $2 recently. But, the contract now tests resistance at $2.15. A further rally above this hurdle can pave way for an up-move to $2.25 and then to $2.35 levels. Key supports are at $2 and $1.85 levels.

Trade Strategy:

Near-term outlook is bullish for MCX-Natural Gas. Traders can initiate fresh long positions on dips with a fixed stop-loss at ₹155 levels.

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