Natural gas futures (continuous contract) on the Multi Commodity Exchange (MCX) saw a decline since the beginning of July. After facing resistance at ₹240, the contract softened and is now trading around ₹215.
On Tuesday, it saw considerable rally, showing that the bulls are now attempting to come back. We expect natural gas futures to rally to at least ₹240 in the near term. That said, a breach of ₹232 can turn the trend positive, possibly lifting the contract to ₹250 quickly. The upside could even extend to ₹275.
On the other hand, if the contract slips below the support at ₹205, the short-term trend is likely to become bearish, where the price could fall to ₹190.
Trade strategy
Since there is a good chance for natural gas futures to see a rally, consider going long now at around ₹215. Add more longs in case the price declines to ₹208. Place stop-loss at ₹200.
When the contract goes past ₹225, tighten the stop-loss to ₹215. Book profits at ₹232.