The September futures contract of natural gas in Multi Commodity Exchange (MCX) was steady last week as it remained above the important support level of ₹184.

The contract has posted a gain for the past three weeks consecutively. This week, on Monday, the price rallied past the previous peak and formed a fresh high of ₹197.5; therefore, the contract continues to form higher highs. These factors show that the upside momentum is intact, and the contract is likely to post more gains.

The price has been diverging on the upside from the 21-day moving average and the moving average convergence divergence indicator in the daily chart continues to point upwards and rising along with the price. The daily relative strength index stays in the bullish region. Given the above factors, one can retain the positive view on the contract.

The prevailing positive outlook is likely to take the price higher and it can be expected to move above the psychological level of ₹200 and possibly rally to ₹213. Above that level, it can even advance to ₹230. But if the bulls give away and the contract weakens, it has a strong support at ₹184. A break below that level can drag the price to ₹176.

Globally, the price of natural gas has been in an uptrend since late June as indicated by the contract in New York Mercantile Exchange (NYMEX). The rally has led to the contract moving above the crucial resistance of $2.5 and the price is set to rise further. Currently trading around $2.6, the nearest hurdles are at $2.7 and $2.9.

Trading Strategy:

The price action of the contract in MCX and NYMEX indicate a substantial uptrend and the prices will most likely head northwards from the current levels. The MCX-Natural gas has formed a fresh high, opening the door for further strengthening. Hence, traders can buy the contract in dips with stop-loss at ₹184.

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