Natural gas futures, which closed at ₹356.80/mmBtu last week, has largely been charting a sideways trend so far this week. It has been oscillating between ₹345 and ₹367.
That said, the contract retains the broader bullish inclination. From the current level, the nearest support is at ₹335. Below this is a rising trendline support, which the contract can meet at ₹310 in case there is a fall. Only a breach of this trendline will turn the short-term outlook bearish.
Notable support levels below ₹310 are at ₹300 and ₹260.
Nevertheless, as mentioned above, natural gas futures is maintaining the bullish stance at the moment.
The price action shows that the contract might break out of the resistance at ₹367 soon. In such a case, natural gas futures can rise to ₹410, a potential resistance. Subsequent barrier is at ₹425. A rally past ₹425 can turn the medium-term trend positive.
Given the above factors, traders can consider longs either after the breakout of ₹367 or in the price band of ₹310-335.
Trading strategy
Buy natural gas futures once it breaks out of ₹367. Target and stop-loss can be ₹410 and ₹340 respectively.