The natural gas futures (continuous contract) on the MCX (Multi Commodity Exchange) marked a high of ₹760 towards the end of July, but unable to extend the up move. After finding the support at ₹600, the contract moved sideways over the past week and oscillating between ₹600 and ₹665.

Ideally, the contract should move out of this range before the next leg of trend. A break of the support at ₹600 would mean the natural gas futures would falll further towards the nearest support at ₹535. A break below this can drag the contract to ₹500.

On the other hand, if the contract breaks out of ₹665, it can retest the prior high of ₹760. A rally past this level can lift the contract to ₹800.

Last week, we recommended shorts across two legs with an average selling price at ₹640 with stop-loss at ₹685. Alternatively, we recommended buying a 600-strike put option at an average price of ₹41 with stop-loss at ₹26.

Traders who had executed either of the above can continue to hold and liquidate the futures when it falls to ₹535. Those who hold options can also exit at the prevailing price when futures price touches ₹535. By then, the price of 600-PE would roughly be around ₹100.

For fresh trades, one can wait for the contract to move out of the ₹600-665 range.