Natural gas futures on the Multi Commodity Exchange (MCX) has been charting a sideways trend since mid-June. The September expiry has been oscillating between ₹215 and ₹235, except for a false breakout that occurred early August when it rallied and marked a high of ₹257.1. However, the contract fell immediately back to the ₹215-235 range.
The contract is currently trading at around ₹220. From here, we expect September futures to dip to ₹215 and then rise again to the range top of ₹235. If the contract breaks out of ₹235, it can retest ₹255. On the other hand, if the contract slips below ₹215, it can fall to ₹200.
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Since the range is holding well, there is a high probability for a rebound from the ₹215 levels, and thus, there is a buying opportunity.
Trade strategy
Initiate fresh long positions in September natural gas futures when the price moderates to ₹215. Keep stop-loss at ₹208. When the contract touches ₹230, alter the stop-loss to ₹220. Book profits at ₹235.