MCX-Natural Gas on a minor recovery mode

Akhil Nallamuthu BL Research Bureau | Updated on October 08, 2019 Published on October 08, 2019

The bearish trend in natural gas seems to have lost momentum as the October expiry futures contract of the commodity in Multi Commodity Exchange of India (MCX) posted some recovery after marking a two-month low of ₹157.5 during the past week. In fact, by studying the chart, one can spot a hammer candlestick pattern in the weekly time frame, which may be an indication of further recovery in the contract price.

The contract faces a confluence of resistance between ₹166 and ₹170. If the price breaks beyond those levels, the contract will most likely appreciate towards ₹180 levels. On the other hand, if the recovery wears out, the contract price might decline to ₹155 levels and then to ₹150.

The price of generic first futures contract of Natural Gas in ICE bounced after taking support at $2.24 levels. The contract moved up to $2.4 during the last week where the recovery faced a hindrance. The price is currently hovering around 50-day moving average. By observing the chart, the price seems to be held between two key levels at $2.24 and $2.4. The weekly chart shows a hammer candlestick pattern, similar to that of MCX-Natural Gas, denoting some buying interest.

In case if the contract breaks above $2.4, it will most likely appreciate to $2.7. However, if the contract weakens and breaks below $2.24, it will most probably slump to the psychological support of $2.

From the charts of both MCX-Natural Gas and generic first Natural Gas contract of ICE, one can safely assume that there is some buying interest for the commodity of late. But still, it trades below a significant resistance.

Hence, traders are advised to stay on the fence and initiate long positions in MCX-Natural Gas futures contract only if the price breaks above ₹170 with stop-loss at ₹155.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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Published on October 08, 2019
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