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Natural gas futures (November contract) on the Multi Commodity Exchange (MCX) has been on a sharp decline since the beginning of this month. It faced resistance at ₹300 and began to fall.
On Tuesday, the contract closed at ₹262.5, slipping below the support at ₹270. This has opened the room for further fall. The nearest support can be seen at ₹245 and ₹240. If there is recovery from the current level, it will most likely be capped at either ₹270 or ₹275.
So, the short-term trend appears weak, and traders can consider fresh short positions.
Trade strategy
Short natural gas futures at the current level of ₹263. Add shorts in case the price moves up to ₹270. Place initial stop-loss at ₹278.
When the contract falls below ₹255, tighten the stop-loss to ₹262. Book profits at ₹246. We expect natural gas futures to rebound from the price band of ₹240-245.
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