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The short-term outlook for the Natural Gas (₹399.5 per mmBtu) futures contract traded on the Multi Commodity Exchange (MCX) is bearish. From a bigger picture, the uptrend that has been in place since March this year halted in September. The contract has been broadly consolidating sideways since then. Within this consolidation, the bounce-back move from the low of ₹387 per kg made on November 1, 2021 lost momentum. The contract has reversed lower again from the high of ₹433.8. There is room to see a fall towards ₹375-₹373 in the coming days.
Traders with a short-term perspective can go short at current levels. Stop-loss can be kept at ₹412. Trail the stop-loss down to ₹396 as soon as the contract moves down to ₹388. Move the stop-loss further down to ₹387 as soon as the contract touches ₹381. Book profits at ₹377. The region between ₹375 and ₹373 is a crucial short-term support. A bounce from this support zone can take the contract up to ₹400. But a strong break below ₹373 will increase the downside pressure.
Such a break can drag the MCX-Natural Gas futures contract down to ₹360-₹350 in the coming weeks. As such price action in the ₹375-₹373 region will need a close watch in the coming days. Also, from a bigger picture, the contract will have to sustain above ₹350 to keep the broader uptrend intact.
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