The continuous futures contract of natural gas on the Multi Commodity Exchange of India (MCX) gained 3 per cent with good volume and breached a key short-term resistance at ₹220 per mmBtu on Tuesday. Further, the contract traded well above the 21- and 50-day moving averages.

In last two trading sessions, the contract has advanced five per cent on the back of buying interest. It appears to have emphatically surpassed a key medium term barrier at ₹220. In mid-March, the contract took support at ₹176 and started to trend upwards. Since then, it has been in a medium term uptrend. Short-term trend is also up. The daily relative strength index has entered the bullish zone from the neutral region and the weekly RSI has also entered the bullish implying upward momentum. Both the daily as well as the weekly price rate of change indicators are featuring in the positive territory implying buying interest.

Going forward, the contract has potential to trend upwards and test the next crucial resistance at ₹240 levels. An emphatic breakthrough the barrier at ₹240 will reinforce the bullish momentum and take the contract northwards to ₹250 over the medium term. Failure to move beyond ₹240 will keep the contract in a sideways band between ₹220 and ₹240. Traders can buy the contract in dips with a stop-loss at ₹218 levels. Key support below ₹220 is placed at ₹210 levels.

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