Natural gas futures on the Multi Commodity Exchange (MCX) have been on a decline for nearly three weeks. The July contract faced resistance at ₹265 and began to fall.
Last week, the contract closed below the support at ₹220, increasing the chance for the downswing to extend further. The nearest support is at ₹200, on the back of this, natural gas futures will most likely recover.
That said, the contract might see a minor corrective rally, possibly to ₹235-240 price band before it touches ₹200.
A breach of the support at ₹200 can intensify the sell-off, leading to the natural gas futures declining to ₹185. On the other hand, if the contract recovers and rises above ₹240, the near-term outlook can turn positive. However, this is less likely given the prevailing conditions.
Trade strategy
Short natural gas futures now at ₹215 and add longs if the price rises to ₹235. Place stop-loss at ₹242. Book profits at ₹200.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.