The price of Natural gas futures has been moderating for nearly two weeks. But looking from a broader level, the contract has been very volatile and there is no clear trend seen on either side.

The December contract on the Multi Commodity Exchange (MCX) started to decline after facing a barrier at ₹300. It has begun the current week on the back foot by losing around 5 per cent in the early trade on Monday.

However, from the current market price of ₹268, there are support levels ahead. The nearest potential support is at ₹265, where a couple of trendlines coincide. Below this ₹256 is another notable support.

But that said, in case there is a bullish reversal from the current level, it is likely to be limited to ₹280, barrier. A breakout of ₹280 can lift the contract to ₹300.

At the current level, the risk-reward ratio is unfavourable for fresh short positions and also, as mentioned above, there are supports ahead. So, traders can consider a short-term long trade when the price dips to the nearest support at ₹265.

But note that long positions carry higher risk and therefore, risk averse traders can stay out.

Trade strategy

Buy natural gas futures (December) if the price dips to ₹265. Place stop-loss at ₹258. When the price rises to ₹275, revise the stop-loss to ₹268. Book profits at ₹280.

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