The continuous contract of natural gas on the Multi Commodity Exchange (MCX) rallied sharply before a couple of weeks with prices shooting up from about ₹300 to a high of ₹412 in early February. However, the rally did not sustain and what followed was a quick fall back to ₹295 by last week.

Noticeably, the price band of ₹285-300 acted as a good base, preventing a decline below this level. On the back of this, the contract has started showing a bullish bias over the past couple of sessions. Substantiating this, the RSI and the MACD on the daily chart are showing positive signs as well.

Currently trading at around ₹325, the nearest resistance is ₹356. Above this level, ₹400 can be a resistance. On the other hand, the price band of ₹285-300 offers strong support. We expect the contract to gather good momentum in the upcoming sessions and is likely to rise to ₹400 with a pause at ₹356. But before this, there is a chance that it could see a corrective decline to ₹310.

Considering the above factors, one can initiate fresh longs at current levels and accumulate when the price dips to ₹310. Initial stop-loss can be placed at ₹278 and raise it upwards to ₹300 when the contract rallies past ₹356. Exit all the longs when price hits ₹400.

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