The near-term downtrend in the natural gas Futures contract traded on the Multi Commodity Exchange (MCX) seems to be reversing.
The support at ₹290 has held very well and the contract has risen back sharply from there. It is currently trading at ₹310 per mmBtu. However, another important resistance is at ₹315. The contract will have to rise past this hurdle decisively to confirm the bullishness. Such a break will pave way for a fresh rise to ₹345-₹350.
A further break above ₹350 will then take the contract higher to ₹400 going forward in the coming weeks.
Traders can wait and take fresh long positions on a break above ₹315. Stop-loss can be placed at ₹285. Trail the stop-loss up to ₹325 as soon as the contract moves up to ₹341. Move the stop-loss further up to ₹345 as soon as the contract rises to ₹370. Book profits at ₹385.
In case the MCX Natural Gas contract fails to break above ₹315 now, it can fall back to ₹300-290 again. In that case, the contract can remain stuck in a narrow range of ₹290-315 for some time. It will also keep the contract vulnerable to break below ₹290 and see a steeper fall to ₹270 and ₹260 thereafter. As such, the price action around ₹315 will need a close watch.