The price of natural gas has been rallying since mid-March. Thus, the continuous contract of natural gas on the Multi Commodity Exchange (MCX), which took support at ₹340 in March, rallied and hit a fresh high of ₹692.5 in early May. While the overall trend is bullish, the price level of ₹700 seems to be making the job difficult for the bulls. Nevertheless, the volatility has not dropped, and notably, the contract seems to be held within the range of ₹500-700 of late. Yet, the bullish bias will persist as long as the price stays above ₹500.

That said, from the perspective of trading, the current levels may not be good to consider fresh positions. Because, although the trend is bullish, ₹700 is now acting as a hurdle. So, traders should wait and follow any of the below-mentioned alternatives based on the price action. Also note that the May contract is just about to expire and so one should plan trades based on the price of June series, which is now trading at a premium of around ₹7 over the May contract.

So, traders can wait and go long in June futures with a stop-loss at ₹650 when it decisively breaches the resistance at ₹700. Exit the trade if the price hits ₹800. Alternatively, rather than breaking out of ₹700, if the contract falls, one can initiate longs when the price touches ₹580. Accumulate longs if the price drops further to ₹540. A stop-loss can be set at ₹490. Tighten the stop-loss to ₹610 as soon as the contract moves up to ₹640. Move the stop-loss further up to ₹645 as soon as the contract touches ₹670. Book profits at ₹690.

comment COMMENT NOW