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The natural gas is still reeling under the selling pressure. The continuous futures contract of natural gas on the Multi Commodity Exchange (MCX) has fallen from the ₹570-600 range to the current level of ₹174.
The price, which has already seen a significant fall in the past three to four months, is likely to go down further.
Since the ongoing March series of futures is set to expire on March 28, we are considering the April expiry for analysis and trade recommendation. Currently hovering around ₹190, the April contract has slipped below the key ₹200-mark last week, opening the door for further weakness.
We expect it to decline to ₹160, support, in the short-term. Subsequent support is at ₹150.
On the other hand, should there be a recovery from the current level of ₹190 we might see a leg of rally to ₹215, or potentially to ₹230. However, from a broader perspective, the contract should rally past the resistance at ₹250 to negate the bearish inclination.
Therefore, at this juncture, we recommend considering short positions.
Trade strategy
One can sell natural gas futures (April expiry) at the current level of ₹190. Add more shorts in case the price inches up to ₹200. Place initial stop-loss at ₹210.
When the contract slips below ₹180, tighten the stop-loss to ₹200. Further, when the contract touches ₹170, modify the stop-loss to ₹185. Book profits at ₹160.
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