Natural Gas prices have risen significantly last week, providing some breather for the commodity. The MCX Natural Gas futures contract on the Multi Commodity Exchange (MCX) fell to a low of ₹186.90 per mmBtu in the first half of December last year. The bounce-back from that low ran into a sideways consolidation phase between ₹200 and ₹220 for a couple of weeks. After this consolidation, the price had surged over 11 per cent last week. MCX Natural Gas futures contract is currently trading at ₹238 per mmBtu.
Outlook
The short-term trend has been down since November last year. The bounce last week, though gives some relief, does not indicate a strong reversal.
A crucial resistance is at ₹241 which can be tested in the coming sessions. The price action thereafter will need a very close watch. A decisive break above ₹241 will indicate a trend reversal. Such a break can take the Natural Gas futures contract up to ₹260 first. An eventual break above ₹260 will then clear the way for a revisit of ₹300 levels over the medium-term.
On the other hand, if the contract turns down failing to breach ₹241, then the price can fall back to ₹220. A further break below ₹220 will see the Natural Gas futures contract declining towards ₹200 and lower again.
Overall, the price action around ₹241 will need a close watch to gauge the next direction of move.
Trade strategy
We suggest traders to stay out of the market. See what happens to the resistance at ₹241. Trades can be taken accordingly thereafter.