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The continuous futures contract of natural gas on the Multi Commodity Exchange (MCX), which declined during the last two months of 2020, attempted a recovery towards the end of January this year. That is, after taking support at ₹180, the contract started to appreciate. However, after hitting ₹240 in mid-February, the contract lost momentum and saw a drop in price. Within a month, the price fell back to ₹180, thereby losing a considerable 25 per cent from the prior highs. But since ₹180 is a strong base,
the futures resumed the rally and this time, it successfully breached the hurdle at ₹240 by the end of June and made a fresh high of ₹312.2 before a couple of weeks. The price action on the daily chart shows that the price band of ₹310 and ₹312 is acting as a strong barrier as it prevented the rally twice in the past one month. The contract slowly drifted lower and is now trading around ₹285.
While the price has dropped over the past two weeks, the trend has not turned bearish, and the contract has a considerable support at ₹280. Also, the overall trend is pointing upwards. Hence, the price drop can be considered as an opportunity to go long. So, traders can buy with stop-loss at ₹273 with targets at ₹300 and ₹310.
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