The natural gas futures contract traded on the Multi Commodity Exchange (MCX) has been in a strong downtrend since August this year. There is room to fall further. The contract is currently trading at ₹564 per mmBtu. Resistance is in the ₹595-600 region. Any bounce from current levels is likely to be capped at ₹600. The contract can fall to ₹500 from current level.
The region between ₹505 and ₹500 is a strong support zone for the long-term trend. The current downtrend has a strong chance of halting here. A strong bounce from the ₹505-500 support zone can take the contract up to ₹590-600 initially. It can also be the beginning of a fresh long-term rally. So, traders taking short positions as recommended below should exit the positions as the contract approaches the ₹505-500 support zone. The price action in the ₹505-500 support zone will need a close watch.
Trading strategy
Traders can go short at current levels. Accumulate shorts on a rise at ₹585. Keep the stop-loss at ₹605. Trail the stop-loss down to ₹555 as soon as the contract falls to ₹540. Move the stop-loss further down to ₹530 when the contract touches ₹520 on the downside. Exit the short positions at ₹510.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.