Yoganand D After gaining 3 per cent on Monday, the price of Natural Gas on the MCX tested a key resistance at ₹167. Subsequently, the December month contract fell by 1.67 per cent to ₹165 on Tuesday.
Following a medium-term downtrend from the early November high of ₹205.9, the contract found support at ₹156 last week. Key support in the band ₹155 and ₹157 had cushioned the contract. The daily relative strength index hovers in the neutral region and the weekly RSI also charts in this region.
A strong break above the current resistance level can take the contract higher to ₹170 in the near term. A further rally beyond ₹170 will strengthen the near-term uptrend and take the contract higher to ₹175 and then to ₹182 in the ensuing weeks. However, the significant resistance as well as the medium-term trend-deciding level is at ₹182. A conclusive break-out of this hurdle will reinforce the bullish momentum and push the contract higher to ₹186 and ₹190 levels.
Conversely, if the contract fails to move beyond ₹167 will keep it range-bound in the band between ₹156 and ₹167 for a while. Immediate supports are at ₹160 and ₹156. Traders can go long on a strong rally above ₹167 with a fixed stop-loss.
On the New York Mercantile Exchange (NYMEX), the generic first contract of natural gas took support at around $2.2 last week and started to move higher. However, it has encountered a resistance at $2.35 and has been testing this level. A decisive rally above this level can pave way for an up move to $2.4 and then $2.5 in the near term. Supports are at $2.2 and $2.1.
Trading strategy
The near-term uptrend tests a key resistance at current level in MCX. Thus, if it breaks above the current barrier, the uptrend will get strengthened. Traders can take long positions above ₹167 with a fixed stop-loss.
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