Natural Gas price has been rising well since the last week of October this year. The Natural Gas futures contract on the Multi Commodity Exchange surged to a high of ₹293.30 per mmBtu last week. However, the price fell sharply on Friday giving back some of the gains made earlier last week. However, the contract has risen back very well at the opening trades today, thereby easing the downside pressure.  It is currently trading at ₹282 per mmBtu.

Outlook

The trend is up. Resistance at ₹293 has held very well and has triggered a fall on Friday. But that has not changed the structure on the chart. It is now important to see if the bounce in early trades today is sustaining or not. Broadly, the fall on Friday is just a correction within the broader uptrend.

As long as the contract trades below ₹293, the chances are high to see more fall this week.  Supports are at ₹252 and ₹240 which can be tested if the bounce fails to sustain. However, a fall below ₹240 is less likely. A reversal either from ₹252 or ₹240 can take the contract up to ₹290 again. A eventual break above ₹293 can take the MCX Natural Gas futures contract up to ₹330 in the coming weeks.

In case the contract breaks above ₹293 from here itself, then the rise to ₹330 can happen without seeing the fall to ₹252 or ₹240.

Trading strategy

Traders can go long on a break above ₹293. Keep a stop-loss at ₹288. Trail the stop-loss up to ₹298 as soon as the contract goes up to ₹308. Move the stop-loss further up to ₹312 when the price touches ₹318. Exit the longs at 325.

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