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The natural gas continuous contract on the Multi Commodity Exchange of India (MCX) has been in a medium-term sideways consolidation phase since October 2020 in the wide band between ₹180 and ₹240. It currently trades at ₹203 mmBtu. The lower boundary at ₹180 had cushioned the commodity in mid-March and early April this year.
Subsequently, the contract started to trend upwards within the consolidation phase. Since early April, the contract has been in a near-term uptrend. While trending up, the contract had surpassed the 21- and 50-day moving averages. However, the contract has encountered a key resistance at ₹207 and it continues to test this hurdle over the past one week.
A strong breakthrough of ₹207 is needed to strengthen the on-going uptrend and take the contract northwards to ₹215 and then to ₹220 levels. A further rally beyond ₹220 will strengthen the uptrend and pave way for an up-move to ₹227 and then to ₹240 levels over the medium term. On the other hand, a decisive fall below the immediate support level of ₹194 can pull the contract down to ₹187 and then to ₹180 in the short term.
Traders with a short-term view can go long on a strong rally above ₹207 with a fixed stop-loss.
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