Natural Gas prices have come down over the last one week. The Natural Gas Futures contract on the Multi Commodity Exchange (MCX)made a high of ₹254 per mmBtu in the first week of this month. From there it has tumbled over 14 per cent and is currently trading at ₹218 per mmBtu.
Outlook
The short-term outlook is bearish. The Natural Gas contract has declined below a key support level of ₹219.50 – the 21-day moving average. As long as the contract trades below ₹219.50, the outlook will remain negative.
MCX Natural Gas Futures contract can fall to ₹200 in the coming days. To avoid this fall, the contract has to rise above ₹220 first and then get a strong subsequent rise above ₹230. Only then the outlook will turn bullish for revisiting ₹250 levels.
But as seen from the recent price action on the charts, a sustained rise above ₹230 looks less likely. As such the chances are high to see a fall to ₹200.
Trade Strategy
Traders can go short now at ₹218. Add more shorts on a rise at ₹220. Keep the stop-loss at ₹228 initially. Trail the stop-loss down to ₹215 as soon as the contract falls to ₹211. Move the stop-loss down to ₹209 when the price touches ₹205. Exit the short positions at ₹200.