Natural gas futures have been witnessing a drop in price for nearly three weeks. The contract faced resistance at ₹320 and then dropped.
Nevertheless, the broader bullish bias remains valid. This is supported by key support levels at ₹270 and ₹255. Only a breach of the latter will alter the near-term outlook.
Natural gas February futures is currently hovering around ₹276. Given the broader positive bias, we expect the contract to resume the rally from the current level or after extending the decline furthermore to ₹255.
A fresh rally can lift natural gas futures back to ₹320, a resistance. But this time, there is a chance for a breach of this level. In such a case, the contract can rise to ₹380.
On the other hand, if the contract invalidates the support at ₹255, the outlook will become weak, dragging the price lower to ₹230, a support. Subsequent support is at ₹220.
Trade strategy
Buy natural gas futures at ₹276 and on a dip to ₹260. Place stop-loss at ₹250. When the contract rises to ₹300, revise the stop-loss to ₹280. Book profits at ₹320.