Natural gas futures on the Multi Commodity Exchange (MCX) has been on a decline over the past three weeks. It faced a roadblock at ₹225 in early January against which the fall began.

While the decline was sharp initially, there seems to be a loss in momentum over the past week. The contract continues to dip, but at a much slower pace. On Wednesday, it closed at ₹177.20.

The weekly chart shows that the nearest support and resistance for natural gas futures is at ₹165 and ₹200, respectively. So, the next swing in price will be along the direction of the break of the ₹165-200 range.

A breach of the support at ₹165 will open the door for the extension of the downtrend. Immediate support levels below ₹165 are at ₹150 and ₹120.

On the other hand, if natural gas futures recover and breaks out of ₹200, the near-term outlook will turn bullish. In such a case, the contract price will most likely rise to ₹235, a resistance. Subsequent resistance is at ₹250.

Trade strategy

Since natural gas February futures is currently hovering around the middle of the ₹165-200 price band, the risk-reward is unfavourable for both long and short positions.

Therefore, traders can stay on the fence for now. Initiate fresh trades along the direction of the break of the above-mentioned range.