The prices of natural gas have been dropping for about a month. The continuous futures of natural gas on the MCX (Multi Commodity Exchange), after peaking at ₹749.6 a month ago, is currently hovering around ₹440. It has lost about 41 per cent from its early June top.

Though no signs of bullish reversal are seen, the daily chart’s relative strength index (RSI) does not form low, indicating bears are losing some strength.

A breach of the nearest support of ₹430 can induce fresh downward momentum, and in this case, MCX natural gas futures can decline to ₹360, notable support. The subsequent support is at ₹330.

But there are also chances for the contract to rally to ₹500 before invalidating the support at ₹430.

So, one can stay away for now. Consider fresh short positions on a fall below ₹430 or on a rally to ₹500.

That is, traders can go short with a stop-loss at ₹480 if the contract drops below ₹430. Exit the shorts at ₹360. Alternatively, if the contract rallies to ₹500 before falling below ₹430, initiate shorts at ₹500 and place stop-loss at ₹570. When the price goes below ₹430, tighten the stop-loss to ₹480. Liquidate the shorts at ₹360.