Natural gas futures on the Multi Commodity Exchange (MCX) has largely been moving in a sideways trend over the last two months. Last week, it began a fresh leg of rally, which has now pushed the contract out of the band.

The October futures, which has been oscillating between ₹208 and ₹240, broke out of the range last week by closing at ₹244.1 on Friday.

The price action looks promising and the probability of a rally from here is high. The nearest notable resistance is at ₹280. Subsequent resistance is at ₹300. On the other hand, if natural gas futures decline from the current level, the price region between ₹235 and ₹240 is a good support band.

A drop below ₹235 can drag the contract to ₹222, where both 20- and 50-day moving averages currently coincide. That said, a fall below ₹235 is less likely.

Trade strategy

Go long on natural gas futures at ₹245 and place stop-loss at ₹230. When the contract touches ₹262, trail the stop-loss to ₹250. On further rally to ₹270, tighten the stop-loss to ₹260. Book profits at ₹275.