Natural Gas prices have been under pressure since the beginning of the week. The Natural Gas futures contract on the Multi Commodity Exchange (MCX) reached a high of ₹304 per mmBtu in the last week of October and has come down from there. The contract had tumbled about 18 per cent from that high to make a low ₹250 earlier this week. It is currently trading at ₹263 per mmBtu.
Outlook
The immediate outlook is mixed. There is room for the contract to fall further. However, strong support is there to limit the downside. The levels of ₹240 and ₹230 are important supports. We can expect the Natural Gas Futures contract to reverse higher anywhere from the ₹240-230 region. Such a reversal will potentially take the Natural Gas Futures contract up to ₹300-305 again.
The view will go wrong only if the contract declines below ₹230. In that case, a fall to ₹220-210 and even lower levels can be seen.
Trade Strategy
Traders can wait for dips. Go long in three tranches at ₹242, ₹238 and at ₹234. So, the average entry level will be at ₹238. Keep the stop-loss at ₹224. Trail the stop-loss up to ₹248 as soon as the contract moves up to ₹256. Move the stop-loss further up to ₹264 when the price touches ₹272. Exit the long positions at ₹285.