For natural gas futures, May has been a good month so far as it has gained about 20 per cent. Participants pushed the prices up to a four-month high of ₹200.3 (per mmBtu) on Tuesday before closing the session at ₹197.70.

Tuesday’s candlestick on the daily chart shows indecisiveness. Also, ₹200 is a considerable hurdle. So, there is a chance for natural gas futures to witness a minor correction in price before surpassing the ₹200-mark.

If there is a decline in price from here, the contract can find a trendline support, which it is likely to meet at around ₹193. Immediately below this is the support band of ₹187-190. We anticipate the natural gas futures to recover from either ₹193 or the ₹187-190 support. Subsequent support is at ₹180.

But if the contract gets past the resistance at ₹200 without a price correction, it can set off for a northward journey towards ₹235, a strong barrier.

Trading strategy

Fresh trades at the current level may not give the traders a reasonable risk-reward ratio. Therefore, one should wait for a clear breakout of ₹200 or for the contract to see a correction to ₹190.

If natural gas futures breaches ₹200, go long with a stop-loss at ₹190. Look for a target of ₹235.

But if the contract inches down, buy when it touches ₹190. Place stop-loss at ₹182. When the contract rallies past ₹200, tighten the stop-loss to ₹190. Book profits at ₹235.