Natural gas futures hit a four-month high of ₹233.4 this week. When the price action is considered, there are no signs of the rally fizzling out. However, the long-term chart shows that ₹235 is a resistance. Making this stiffer, a trendline falls at this level.
Therefore, we might see a correction in price, if not a bearish reversal. The trend will turn bullish only if natural gas futures fall below the support at ₹205. Until then, the view will be positive, but there might be a moderation in price from the current level of ₹220.
The dip in price can go up to ₹205, its 200-day moving average. If a rebound from this level can help natural gas futures breakout of ₹235, it will open the door for a new leg of the rally. Resistance levels above ₹235 are at ₹250 and ₹270.
Trade strategy
Refrain from taking new positions at the current price. Buy natural gas futures if its price dips to ₹205. Place stop-loss at ₹195. When the contract rises above ₹225 after this trade is initiated, raise the stop-loss to ₹210. Book profits at ₹235.
If the natural gas futures breakout of ₹235, either after a correction or from the current level itself, go long. Stop-loss can be at ₹220. When the contract surpasses ₹250, alter the stop-loss to ₹235. Further, tighten the stop-loss to ₹245 when the contract touches ₹260. Exit at ₹270.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.