Natural gas futures (April contract) on the Multi Commodity Exchange (MCX) have largely traded sideways over the past month. The boundaries are at ₹142 and ₹158. The 50-day moving average lies at ₹160, making the price region between ₹158 and ₹160 a resistance.

As the overall trend is bearish and since natural gas futures are hovering around a resistance, the probability of a decline is high. If the price falls from here, the range bottom at ₹142 can offer some support. If this level is breached, the contact can drop to ₹130, a support. Subsequent support is at ₹120.

On the other hand, if natural gas futures rally past ₹160, it can turn the short-term outlook positive. Potential resistance levels above ₹160 can be seen at ₹176 and ₹190.

Trade strategy

We suggested going short on natural gas futures last week, at ₹156 with a stop-loss at ₹165. Since the resistance holds, you can retain the short position. When the contract slips below ₹142, tighten the stop-loss to ₹150. Book profits at ₹130.