Commodity Calls

MCX natural gas should top ₹240 for bullish momentum

Yoganand D. BL Research Bureau | Updated on March 22, 2021

The Natural Gas continuous contract on Multi Commodity Exchange of India (MCX) has been in a sideways consolidation phase since October 2020 in the wide band between ₹180 and ₹240. In mid-February this year, the contract tested the upper side at ₹240 and then dropped on the back of selling interest. The contract has been in a short-term downtrend since then. It now trades at ₹183.8 mmBtu.

However, the contract is now testing significant support as well as the 200-day moving average at around ₹180.

Although the daily relative strength index is displaying positive divergence, implying a trend reversal is possible, the contract lacks bullish momentum.

Therefore, traders with a short-term perspective should tread with caution. An emphatic breakthrough of the key support at ₹180 will strengthen the short-term downtrend and pull the contract down to ₹168 and then to ₹160 over the short term.

Conversely, a conclusive rally above the immediate resistance level of ₹200 is needed to signify trend reversal. In that case, the contract can extend the up-move to ₹210 and then to ₹220 levels.

Next key barrier is the upper boundary which is ₹240.

A decisive break above ₹240 is required to bring back bullish momentum and can pave way for a up-move to ₹260 over the medium term.

Published on March 22, 2021

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