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Natural Gas prices witnessed a corrective rise in line with our expectations last week. The Natural Gas Futures contract traded on the Multi Commodity Exchange (MCX) rose to a high of ₹148.30 per mmBtu. However, after this rise, the price has come down again. The Natural Gas Futures contract is currently trading at ₹138.50 per mmBtu
The broader trend is down. The rise seen last week was just a correction within that. The reversal from the high of ₹148.30 indicates that the broader downtrend is still intact. The Natural Gas Futures contract has risen back again today. This keeps alive the chances of seeing one more leg of rise before the broader downtrend resumes. .
Immediate resistance is at ₹141. A break above it can take the contract up to ₹148 and even ₹156 again. But ₹156 is a strong resistance where a trendline as well as a moving average is poised. That will make the price rise beyond ₹156. As such, we can expect the Natural Gas contract can turn down again and fall back to ₹130-128. An eventual break below ₹128 will drag the contract down to ₹120-115 in the coming weeks.
Trade Strategy
Traders can take fresh short positions on a break below ₹128. Keep a stop-loss at ₹132. Trail the stop-loss down to ₹126 as soon as the contract falls to ₹124. Move the stop-loss down to ₹123 when the price touches ₹121. Exit the shorts at ₹120.
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