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Natural gas price is coming down after witnessing a short-lived corrective rise. The Natural gas futures contract on the Multi Commodity Exchange (MCX) fell to a low of ₹169.60 per mmBtu last week and recovered from there. However, after rising to a high of ₹190 on Monday this week and then has reversed lower again. The Natural gas futures contract is currently trading at ₹180 mmBtu.
Outlook
The broader outlook is bearish. The contract has been in a strong downtrend mid-June this year. This downtrend is intact. There is a negative moving average cross over on the daily chart. This is a bearish signal. It also strengthens the bearish case and indicates that the upside can capped.
Some support is around ₹170, which can be tested in a week or two. A break below ₹170 will increase the selling pressure. Such a break can take the MCX natural gas futures contract down to ₹162-160 first. A further break below ₹160 will see the fall extending towards ₹162-160 in the next few weeks.
Clusters of resistances are in the broad ₹196-202 region. The contract must breach ₹202 decisively to indicate a trend reversal. Only then the outlook will turn bullish and take the contract up to ₹205-210.
Trading strategy
Traders can go short now at ₹180. Accumulate on a rise at ₹183. Keep the stop-loss at ₹187. Trail the stop-loss down to ₹178 as soon as the contract falls to ₹176. Move the stop-loss further down to ₹175 when the contract touches ₹173. Exit the short positions at ₹170.
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