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Natural gas futures on the Multi Commodity Exchange (MCX) have been on a decline since September last year. It has fallen substantially and the nearest expiry — that is, February futures — is currently hovering around ₹210.
Although the trend has not turned bullish, the selloff seems to be losing pace as the contract recently entered a consolidation phase. The February contract has been oscillating between ₹200 and ₹220 since the beginning of the month.
The next leg of the trend — that is, the short-term price swing — depends on the direction the contract takes from this range. A breach of the support at ₹200 can result in a quick fall to ₹180, whereas a breakout from ₹220 can possibly lift the price to ₹250.
Trade strategy
A couple of weeks ago, we suggested selling natural gas futures at ₹227. Exit this trade with a profit at the current level of ₹210 as the recent sideways trend has slowed the bears.
Stay out for now and wait for the break of the ₹200-220 range before initiating fresh trades.
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