Natural gas futures (continuous contract) on the Multi Commodity Exchange (MCX) broke out of a key resistance at ₹165 per mmBtu (metric million British thermal units) on Monday. This has turned the short-term outlook positive.

That said, the chart of May contract shows that there is a resistance ahead at ₹178. But given the current momentum, the probability is high for natural gas futures to go beyond the hurdle at ₹178.

The nearest resistance above ₹178 is at ₹197. The price region between ₹197 and ₹200 is a barrier. A breach of ₹200 can open the door for a rally to ₹215 or even to ₹230.

That said, as of now, the contract has not shed the bearish bias completely. The potential rally from the current level to ₹200 may be a corrective one. So, we suggest only traders with high-risk appetite can consider longs.

Trade strategy

Buy natural gas futures (May series) now at ₹175. Add longs in case the price dips to ₹168. Place stop-loss at ₹158. When the contract rises above ₹182, alter the stop-loss to ₹172. Tighten the stop-loss further to ₹180 when the price touches ₹190. Book profits at ₹196.