Commodity Calls

Go short on MCX natural gas

Yoganand D BL Research Bureau | Updated on August 30, 2021

Keep the stop-loss fixed at ₹322

The continuous futures contract of natural gas on the Multi Commodity Exchange of India (MCX) has fallen 3 per cent to trade at ₹311 per mmBtu on Monday, after registering an intra-day high at ₹331.

This fall is in line with the decline in global natural gas which has slumped 3.2 per cent to $4.2 on Monday, following a sharp 14.8 per cent jump in the previous week.

As the commodity had witnessed a sharp rise in price and tests a key long-term resistance at around $4.5, a near-term corrective decline is possible in the form of profit-booking.

Both medium and short-term trend are up for the commodity.

On the global front, the natural gas can extend the corrective decline and test the immediate support at $4.16. A further fall can test the next crucial short-term support at $4.

An upward reversal from either of these supports can take the commodity price higher to $4.4 and then to $4.5 levels.

On the domestic front, the commodity price has been in a medium-term uptrend since it took support at around ₹180 in early April this year. Short-trend is also up.

The contract trades well above the 21- and 50-day moving averages.

However, the contract can extend the corrective decline and tests support at ₹310. A fall below this level can test next support at ₹300. An upward reversal from the second support can take the contract higher to ₹321 and then to ₹331 levels.

Having said that, an emphatic plunge below the vital base level of ₹300 can pull the contract down to ₹290 and then to ₹280 over the short term.

Traders can initiate fresh short positions with a fixed stop-loss at ₹322 levels.

Published on August 30, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like