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The continuous contract of natural gas on the Multi Commodity Exchange (MCX) was moving in a tight range of ₹325 to ₹350 in the second week of last month. Prior to that, it rallied by rebounding from the support at ₹300 in the first week of February. After breaking out of ₹350 last Thursday, it broke out of the resistance at ₹375, opening the door for further strengthening. It closed above ₹375 last week, and on Monday, it moved past ₹400-mark and thus, the buying momentum seem to sustain.
Going forward, the contract is likely to head north. Although ₹410 is a resistance, it appears to be a minor one and the futures will most probably appreciate above that level. Notable resistance is seen at ₹435, above which ₹460 can be the barrier. While moving up, the contract is likely to pause at around ₹435 and then eventually rally to ₹460.
Traders can be bullish and initiate fresh long at the current level of ₹390. Accumulate more longs when the price drops to ₹375 and place initial stop-loss at ₹350 i.e., below the support at ₹360. Because a clear breach of this support can turn the trend bearish. When price rises to ₹435, modify the stop-loss to ₹390. Exit fully the longs at ₹460 as there could be profit booking once the contract reaches those levels.
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