The price of natural gas futures has been on the rise since August last year. The continuous futures contract of the energy commodity on the Multi Commodity Exchange (MCX) rebounded on the back of support at ₹160.
Over the past month, the natural gas futures surpassed the barriers at ₹255, ₹270 and ₹290. The nearest expiry i.e., January contract marked a high of ₹355.40 on December 30 before moderating to the current level of ₹308.
Going ahead, the contract might moderate to ₹300. It could then resume its rally and is likely to retest the resistance at ₹350. A breakout of this can lift the contract to ₹430, a notable resistance.
In case the contract slips below ₹300, it can decline to the price band of ₹270-290, and then resume the upside. Only a breach of the support at ₹255 will turn the trend bearish. Until then, the bulls will have an advantage over the bears.
Trade strategy
Traders can wait for natural gas futures (January) to soften to ₹300 and then initiate longs. Target and stop-loss can be ₹350 and ₹280, respectively.