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Natural gas futures on the Multi Commodity Exchange (MCX) continue their run towards south and there is no end in sight. Last week, they broke below the support at ₹150, opening the door for further fall. The futures closed at ₹133.3 on Friday.
On the daily chart, there are no signs of a bearish reversal. At best, natural gas futures can see a corrective rally from here. Such a move can take the contract to ₹135. A rally beyond this is less likely.
So, from the current level, natural gas futures could retrace to ₹135 and then resume the downtrend. The nearest notable support is at ₹120. Given the current momentum, natural gas futures is highly likely to fall to ₹120 in the near-term.
For the bulls to have some hope, the price should cross over ₹150 and sustain above the same for some time.
Trading strategy
Short natural gas futures when the price inches up to ₹132. Add shorts if the potential corrective rally takes the contract to ₹135. Place stop-loss at ₹140 initially.
When the contract falls to ₹125, tighten the stop-loss to ₹132. Book profits at ₹120.
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