Natural gas futures on the Multi Commodity Exchange (MCX) has been on a downtrend since mid-June. But so far in August, the prices have been recovering on the back of a support.
Since the August expiry is nearing expiry, we consider the September contract for the purpose of analysis and trade recommendation.
The September expiry natural gas futures found support at ₹170 in early August and moved up. However, the recovery seems to have hit a wall.
Currently trading at ₹196, the contract is facing a resistance at ₹204. Also, the chart shows that it has been oscillating between ₹188 and ₹204 for a little over a week.
Only a breach of ₹204 can turn the outlook positive. In such a case, natural gas futures can rally to ₹234. The 61.8 per cent Fibonacci retracement of prior downswing coincides at ₹234.
But if the price declines below ₹188, the contract can fall to ₹170, a support, quickly. Subsequent support is at ₹160.
Trading strategy
Until the September futures of natural gas trade within ₹188 and ₹204, the next leg of trend will be uncertain. So, traders can wait and take position along the direction of the break.