Natural gas futures have been on a decline over the past week. The June contract on the MCX, which made a high of ₹263.4 last week, fell and closed at ₹223.1 on Wednesday.
While the broader trend remains bullish, there is a chance for the contract to see some more correction before resuming the rally. So, going ahead, natural gas June futures is likely to fall to the ₹205-210 price band and then rally, potentially to ₹270.
On the other hand, if the contract breaks below the support at ₹205, the short-term outlook can turn bearish. In such a case, natural gas futures can see a drop to ₹170.
Nevertheless, as it stands, the contract retains the bullish bias and so, traders can consider long positions, not at the current level, but on a dip in price.
Trade strategy
Stay out for now. Buy natural gas futures if its price dips to ₹205. Place stop-loss at ₹195. When the contract rises above ₹235 after this trade is initiated, raise the stop-loss to ₹220. Book profits at ₹250.