Natural Gas prices have been increasing rapidly over the last three weeks. The Natural Gas Futures contract on the Multi Commodity Exchange (MCX) made a low of ₹156.70 per mmBtu in the last week of August and surged about 30 per from there to make a high of ₹202.4 last week. It has come off from there and is currently trading at ₹191 per mmBtu.
Outlook
The outlook is bullish. Immediate support is around ₹190. Below that ₹187 is the next important support. We expect the contract to bounce from either of these two supports mentioned above. Such a bounce can take the MCX Natural Gas Futures contract up to ₹210-₹215 in a week or two. It will also keep the doors open for the contract to target ₹235-₹240 in the coming weeks.
The near-term outlook will turn negative if the contract declines below ₹187. That can take the contract down to ₹182 initially. The trend will turn down only if the contract breaks below ₹182. If that happens, we can see a fall to ₹170 and lower again. But such a fall looks less likely.
Trade Strategy
Traders can go long now at ₹191. Accumulate on dips at ₹188. Keep the stop-loss at ₹181. Trail the stop-loss up to ₹193 as soon as the contract goes up to ₹196. Move the stop-loss further up to ₹199 when the price touches ₹204. Exit the longs at ₹210.