Technical Analysis

MCX-Natural Gas may chart northwards

Akhil Nallamuthu BL Research Bureau | Updated on March 24, 2020

The price of Natural Gas has been consolidating for the past two months. The April futures contract of Natural Gas on the Multi Commodity Exchange (MCX) has been moving in a broad sideways trend in the band between ₹125 and ₹150. On Monday, it retested its bottom level and bounced.

Because of the sideways trend, the contract has been traversing across the 21-day moving average. Despite remaining below the mid-point level of 50, the daily RSI has been in an upward trajectory since last week. On the other hand, the MACD on the daily chart is flat.

Though the contract is moving in a broad sideways trend, the overall trend remains bearish for Natural Gas. On the back of this, if the contract falls, it has an immediate support at ₹125, that is, the lower boundary of the range. A break below that level can drag the contract to ₹110. On the other hand, if the contract regains upward momentum, ₹140 can act as a hurdle. Above that level it could retest the upper boundary of the range at ₹150. A breakout of ₹150 can change the medium-term trend positive.

On the global front, the generic first contract of Natural Gas on the New York Mercantile Exchange (NYMEX), briefly slipped below the critical support of $1.6 and registered a new low of $1.52 on Monday. But the contract bounced back above $1.6 and is currently trading at $1.72. Though the major trend is bearish, the price action is indicating a short-term uptrend to $1.85 levels. This can positively influence the contract price on the MCX.

Trading strategy

MCX-Natural Gas contract has been moving in a broad sideways trend. Currently, the contract is trading near the lower bottom of the range. Hence, for the short-term, traders can initiate long positions on declines with a stop-loss at ₹125.

Published on March 24, 2020

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