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The March futures contract of Natural Gas on the MCX made a low of ₹119.6 on last Friday. From then on, the contract started to recover and is currently trading near the 21-DMA resistance at ₹134.7. But, as long as the price remains below ₹142.7, the contract can be under the influence of bear trend. As the price action on the daily chart shows lower highs and lower lows, there is scope for downward momentum.
Corroborating the bearish stance, the daily RSI lies below the mid-point level of 50 despite the recent uptick on the back of a price bounce in the last two trading sessions. The MACD indicator on the daily chart is in the bear zone.
On the back of the overall downtrend, if the contract resumes its downward trajectory, it is likely to decline to ₹120 in the coming days. A break below that level can drag the price to ₹112. On the other hand, if the contract manages to rally past the 21-day moving average, it will face a substantial hurdle at ₹142.7; a breakout of that level can take the price to ₹151.8.
On the global front, the generic first contract of Natural Gas on the New York Mercantile Exchange (NYMEX), as on the MCX, has been inching up in the last few trading sessions and is trading at $1.8. However, it remains below the critical level of $2 and price stays below the 21-DMA. Thus, the trend remains bearish and it is likely to weaken in the near-term.
Trading strategy
The futures contract of Natural Gas has been rallying for the past few trading sessions. But the major trend remains bearish and it faces a resistance at current levels, that is, the 21-DMA. So, traders can sell MCX-Natural Gas on rallies with a stop-loss at ₹143.
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