Natural gas futures (December contract) on the Multi Commodity Exchange (MCX) has been on a decline since the beginning of November. It started to fall after facing resistance at ₹320. On Wednesday, it closed at ₹236.3.
The contract has a support zone in the price region between ₹230 and ₹236. We expect the contract to shed its bearish inclination in the coming days and rally thereafter. If not a bullish reversal, natural gas futures is expected to witness at least a corrective rally.
If the contract bounces off the ₹230-236 price range, it can rally to ₹260. A breach of this level can turn the short-term outlook bullish. In such a case, natural gas futures can potentially appreciate to ₹275.
On the other hand, if natural gas futures breaks below the support at ₹230, we will most likely see another leg of downtrend. The immediate support below ₹230 is at ₹200. Subsequent support is at ₹180. But since the contract is now trading near a support, a recovery is possible.
Trade strategy
Buy natural gas futures (December contract) at the current level of ₹235. Keep initial stop-loss at ₹222. Raise this to ₹238 when the contract touches ₹250. Book profits at ₹258.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.