I would like to know about natural gas which is slowly building up above $3. Can you provide an analysis based on the charts? – Sanjay

Natural gas futures on NYMEX moved above $3-mark in early October. This has certainly turned the short-term outlook bullish on the chart. However, after facing resistance between $3.50 and $3.65, the price of natural gas started charting a sideways trend. This has been the case for the past three weeks.

Nevertheless, as you mentioned, the commodity sustains above $3 and this increases the chances of the extension of the upswing. We would further add that the bullish bias will remain valid until the price holds above $2.85, a key support. 

However, although the probability of the price surpassing $3.65 is high, we cannot really predict the time of such a breakout. Given the prevailing chart set up, natural gas prices could move horizontally for some more time. This consolidation phase can see its price oscillate between $3 and $3.65.

Expect the price to eventually move above $3.65, possibly towards the end of this year or in early 2024. A cross above $3.65 can trigger a rally towards $4.50, where there could be some profit-booking. This can lead to a minor decline. That said, for price movement after natural gas touches $4.50, we need to wait and watch. Because it depends upon the momentum of the rally to $4.50.

The above analysis will be negated if the price of natural gas falls below $2.85. Such a decline can turn the outlook bearish. Support below $2.85 can be spotted at $2.50 and $2.20, which has the potential to arrest the fall.

MCX-Natural gas: In the domestic market, the price of natural gas futures might rally to the price region between ₹375 and ₹400 when the NYMEX futures appreciate to $4.50. Note that the domestic market price also depends on the dollar-rupee exchange rate movement.

MCX natural gas futures will carry the bullish bias until the price sustains above ₹230.

Send your queries to derivatives@thehindu.co.in

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