The March futures contract of Natural Gas on the MCX rallied in the past week and went past the 21- and 50-DMAs. But after marking a high of ₹148.9 last Wednesday, the price started to moderate and have drifted below the averages.

On the daily chart, it can be observed that the contract has been fluctuating in the band between ₹120 and ₹149 for the past two weeks and unless either of these levels are breached, it will stay range-bound.

The daily RSI has come down along with the contract price recently; also, it is now below the mid-point level of 50 — a bearish indication. The MACD indicator on the daily chart, though on an upward trajectory, is indicating a weakness as the contract could not build onto an upside momentum.

Though the contract is has been having a sideways trend, the overall trend remains bearish for the Natural Gas. On the back of this, if the contract falls, it has an immediate support at ₹130. A break below that level can drag the contract to ₹120. On the other hand, if the contract regains upward momentum, it could retest ₹149. Above that level, the contract can rally to ₹158.

On the global front, the generic first contract of natural gas on the New York Mercantile Exchange (NYMEX), as on the MCX, has been consolidating in a broad range for the past three weeks. The price band is between $1.6 and $2. Until the contract remains within the range, the upcoming trend cannot be confirmed. Support below $1.6 is at $1.25 whereas resistance above $2 is at $2.2.

Trading strategy

Until the contract price in MCX remains below ₹150, one can take a bearish view. But the contract has an important support at ₹130. Traders can initiate fresh short positions with a stop-loss at ₹140, if price decisively breaks below ₹130.