The outlook for the Natural Gas futures contract on the Multi Commodity Exchange is bullish. The Natural Gas December Futures contract has surged above 5 per cent on Wednesday and is now trading at ₹625 per mmBtu. The strong rise has taken the contract well above the key resistance level of ₹618.
There is a complex inverted head and shoulder pattern formation visible on the charts. The neckline of this pattern is coming at ₹618. So, this level of ₹618 will now act as a good resistance-turned-support. Below that ₹605-₹600 will be the next strong support.
Indicators on the charts are also giving bullish signal. The 21-Day Moving Average is turning up. It can cross above the 200-Day Moving Average if the prices continue to rise. This indicates that any intermediate dips could be limited.
The chances are high now for the MCX Natural Gas Futures contract to rise to ₹690 in a week or two. This level is a strong intermediate resistance which can hold on its first test. As such, a corrective fall from ₹690 towards ₹620 cannot be ruled out.
Traders can go long at current levels. Accumulate on dips at ₹610 in case if a dip below ₹618 is seen. Keep the stop-loss at ₹595. Trail the stop-loss up to ₹635 as soon as the contract moves up to ₹655. Move the stop-loss further up to ₹665 when the contract rallies to ₹675. Book profits at ₹685.