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The continuous futures contract of natural gas on the Multi Commodity Exchange (MCX) began its rally in April this year from about ₹180.
However, in May the contract started to move sideways i.e., it was largely consolidating within the price band of ₹212 and ₹230 in May. In June, the contract resumed its rally and broke out of the resistance of ₹230 with good volumes. The rally accelerated before a couple of weeks and consequently, it rallied past the key levels of ₹250 and ₹270.
Nevertheless, the up-move slowed down over the past week. However, the contract remains above the key level of ₹270 and until it stays above this level, the short-trend will be bullish. Apart from this, the indicators like the relative strength index (RSI) and the moving average convergence divergence (MACD) on the daily chart are positive. That is, the RSI is above the mid-point level of 50 and the MACD continues to trace an upward trajectory. The average directional index shows that the bulls are at an advantage over the bears. Besides, the contract is above both 21- and 50-day moving averages (DMAs).
Considering the above factors, traders can maintain a bullish bias. But since ₹282 is a minor hurdle, one can initiate fresh long positions if the contract breaks out of ₹282. Stop-loss can be placed at ₹270. A breach of ₹282 can intensify the rally and take the contract to ₹290 and possibly to ₹300 in the near-term.
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