Natural gas futures (April contract) on the Multi Commodity Exchange (MCX) had found support at ₹148 since mid-February until it broke below the support last week, turning the outlook bearish.

After a low of ₹142 last Thursday, natural gas futures recovered and closed at ₹156.6 on Tuesday. Although the contract has reclaimed the ₹148-mark, it faces a resistance at ₹158. Just above this is a falling trend-line resistance, which the contract could meet at ₹162. Therefore, the price band of ₹158-162 is a barrier.

We expect natural gas futures to resume the downtrend from the resistance band. The price could fall to ₹130, a support, in the near term. Subsequent support is at ₹120.

On the other hand, if natural gas futures breaks out of ₹162, it can extend the rally to ₹176, a resistance. Next resistance is at ₹190.

Trade strategy

On the back of the resistance at ₹158-162, we suggest going short on natural gas futures now at around ₹156. Place stop-loss at ₹165. When the contract slips below ₹142, tighten the stop-loss to ₹150. Book profits at ₹130.