Commodity Calls

Bet long on natural gas futures

Akhil Nallamuthu | Updated on: Nov 29, 2021
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Natural gas futures broke out of the hurdle at ₹400 last week with significant volume

BL Research Bureau

Over the past month, the natural gas prices saw a decline. As a result, the December futures of the commodity on the Multi Commodity Exchange (MCX), which marked a high of ₹502.4 in early October, declined towards the support band of ₹355 and ₹362 a couple of weeks ago. Since then, it has been moving back and forth within the range of ₹362 and ₹400.

With this backdrop, natural gas futures gained strong buying momentum and broke out of the hurdle at ₹400 last week with significant volume, turning the short-term outlook positive. Apparently, the contract is now above the 21-day moving average (DMA). Supporting the bullish inclination, the moving average convergence divergence (MACD) and the average directional index (ADX) are showing fresh uptick. Notably, until the futures remain above the support band of ₹355 and ₹362, the bias will be positive. Thus, the contract is likely to gain to ₹440 with subsequent resistances at ₹464 and ₹475. Although the contract moderated on Monday, it is expected to regain bullish momentum and move northwards.

So, traders can buy December natural gas futures at current level of ₹383 and accumulate if price softens to ₹360. Place initial stop-loss at ₹335. Potential targets can be ₹440 and ₹464. That is, when contract touches ₹440, liquidate 70 per cent of the positions. Thereafter, revise stop-loss to ₹415 and exit the remaining longs when the contract rises to ₹464.

Published on November 29, 2021

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