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BL Research Bureau
The continuous contract of natural as on the Multi Commodity Exchange (MCX), which broke out of the important level of ₹250 towards the end of June, faced a hurdle after hitting ₹400 in mid-September. Consequently, the contract witnessed a drop in price. However, the bulls remained firm and on the back of the 21-day moving average support at around ₹355, started pushing up the price.
The rally immediately gained traction and within a few sessions from the bounce, the contract decisively breached ₹400-mark and registered a fresh high of ₹485, a week ago. But then, it moderated and retested the support of ₹400 last week. Apparently, this is a significant support since the 21-DMA has risen to this level and the 38.2 per cent Fibonacci retracement level of the prior up-move coincide at this level. Thus, the contract is expected to stay above this level and embark on another leg of rally.
On the upside, the contract can move past the minor hurdle at ₹450 and then retest the high of ₹485. The futures has the potential to move beyond this level and touch the key level of ₹500 in the near-term.
Given the prevailing scenario, traders can consider going long at current levels of ₹435 and buy more if the price drops to ₹410. Place stop-loss at ₹385 initially and shift it upwards to ₹410 and look for the target at ₹500.
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