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.