Natural gas futures on the Multi Commodity Exchange (MCX) closed at ₹240.3 MMBtu last week, posting a marginal loss of 1.6 per cent.
Nevertheless, the price stays above both 20- and 50-day moving averages. Also, the breakout of ₹240 that occurred last week has kept the broader bias bullish.
From the current level, we expect natural gas futures to resume the uptrend. The nearest notable barrier is at ₹280. Above this, ₹300 is a strong resistance.
On the other hand, if the contract falls from here, ₹230 can offer support. But if this is breached, the price can extend the decline to ₹215. That said, as it stands, the chance for a recovery appears high.
Trade strategy
Retain the longs on natural gas futures that we suggested at ₹245 last week. Maintain a stop-loss at ₹230. When the contract touches ₹262, trail the stop-loss to ₹250. On further rally to ₹270, tighten the stop-loss to ₹260. Book profits at ₹275.