Natural gas futures on the Multi Commodity Exchange (MCX), after facing a resistance at ₹275 last week, saw a sharp decline in price. On Tuesday, it closed at ₹243.7 and on Wednesday’s early trade, the prices had continued to fall.
A fall below ₹240 hints at the resumption of the bear trend. From the current level, there might be a corrective rally to ₹245 but not beyond it. Eventually, the natural gas futures are expected to fall to ₹214 in the near term. Support below ₹214 is at ₹200.
On the other hand, if the contract recovers above ₹245, it can face a roadblock at ₹275. A breakout of this level can turn the trend bullish. Resistance above ₹275 is at ₹300.
Trading strategy
The price action indicates a clear bear trend. So, we suggest going short on natural gas futures at the current level of ₹235 and add shorts if the price rises to ₹245. Place stop-loss at ₹255.
When the contract slips below ₹225, tighten the stop-loss to ₹232. Book profits at ₹215.