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Natural gas futures on the Multi Commodity Exchange (MCX) have been on a decline for nearly three weeks. The July contract faced resistance at ₹265 and began to fall.
Last week, the contract closed below the support at ₹220, increasing the chance for the downswing to extend further. The nearest support is at ₹200, on the back of this, natural gas futures will most likely recover.
That said, the contract might see a minor corrective rally, possibly to ₹235-240 price band before it touches ₹200.
A breach of the support at ₹200 can intensify the sell-off, leading to the natural gas futures declining to ₹185. On the other hand, if the contract recovers and rises above ₹240, the near-term outlook can turn positive. However, this is less likely given the prevailing conditions.
Trade strategy
Short natural gas futures now at ₹215 and add longs if the price rises to ₹235. Place stop-loss at ₹242. Book profits at ₹200.
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