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Natural gas futures on the Multi Commodity Exchange (MCX) have been on a decline for the past two weeks. The continuous contract began the decline after facing resistance at ₹285.
However, since the beginning of this week, the contract has moved up gradually. The continuous contract has found support between ₹235 and ₹240. It closed at ₹245.2 on Monday. Since the nearest contract i.e., October series, expires on October 26 – Thursday, for the purpose of further analysis, we shall consider November series.
November futures of natural gas on the MCX , which closed at ₹274.8 on Monday, is trading at a premium to the October series. The November contract bounced off the support at ₹270 early this week.
The contract faces resistance at ₹278. If this barrier is breached, the contract could rally to ₹286, a potential resistance. Just above this is another hurdle at ₹290.
On the other hand, if the support at ₹270 is breached, we could see a quick fall towards ₹250. But at this juncture, this looks less likely.
Trade strategy
Buy November futures of natural gas if it decisively breaks out of ₹278. Target and stop-loss for this trade can be at ₹290 and ₹273, respectively.
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