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Natural gas price fell last week. The natural gas futures contract on the Multi Commodity Exchange (MCX) dropped from a high of ₹261.20 per mmBtu to a low of ₹230.90 on Monday before bouncing back. The contract is currently trading at ₹241.50 per mmBtu.
Outlook
The overall trend has been upwards since the last week of April. So the fall over the past week is just a correction. The broader uptrend is intact. Support is in the ₹232-230 region, which has held well. As long as the contract stays above ₹230, the uptrend will remain intact.
Immediate resistance is at ₹245. A break above it can take the natural gas futures contract up to ₹275-280 in the short term.
The short-term outlook will turn negative only if the contract declines below ₹230. In that case a fall to ₹220-218 may be seen. For this to happen, the contract must sustain below ₹245. But that looks less likely.
Trade strategy
Traders can wait and go long on a breakout above ₹245. Keep the stop-loss at ₹235. Trail the stop-loss up to ₹249 as soon as the contract moves up to ₹255. Move the stop-loss further up to ₹258 when the price touches ₹265. Exit the longs at ₹270.
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