Natural Gas prices have been rising sharply over the last one week. The Natural Gas Futures contract traded on the Multi Commodity Exchange has surged about 15 per cent in the last one week. It is currently trading at ₹344 per mmBtu.
Outlook
The outlook is bullish. The surge last week indicates a bullish breakout. This rise has taken the Natural Gas Futures contract well above a key resistance level of ₹330. The price action since mid-April this year indicates a bullish reversal pattern. This pattern indicates that the prior downtrend has ended and a fresh leg of upmove has begun.
As such the level of ₹330 will now act as a strong support and limit the downside. Intermediate dips are likely to get fresh buyers coming into the market around ₹330.
The MCX Natural Gas Futures contract has potential to target ₹415 in the coming weeks. To negate this rise, the contract has to fall below ₹330 again. But that looks less likely as the breakout on the chart appears very strong.
Trade Strategy
Traders can go long now at ₹344. Accumulate on dips at ₹338. Keep the stop-loss at ₹312 initially. Trail the stop-loss up to ₹352 as soon as the contract goes up to ₹365. Move the stop-loss further up to ₹368 and ₹385 when the contract touches ₹375 and ₹395 respectively. Exit the long positions at ₹410.