Natural Gas prices have been on the rise since the beginning of February this year. The Natural Gas Futures contract traded on the Multi Commodity Exchange (MCX) have surged over 50 per cent from its February low of ₹260 per mmBtu. It is currently trading at ₹405 per mmBtu.
Outlook
The Natural Gas Futures contract has begun the week on a strong note with a wide gap-up open. It has also got a strong follow-through rise after that. That keeps the bullish momentum intact.
Supports are at ₹390 and ₹360. Immediate resistance is at ₹420. A break above it can take the contract up to ₹440-450 in the short-term.
The region around ₹450 is a strong resistance which can halt the current rally. A reversal from this resistance can drag the contract down to ₹420-400 again.
On the other hand, if the Natural Gas Futures contract manages to breach ₹450 in its first attempt itself, then a further rise to ₹465 can be seen. As such the price action around ₹450 will need a very close watch which will determine the direction of move thereafter.
The Natural Gas Futures contract will have to fall below ₹360 to become bearish. If that happens, we can see the price falling to ₹320-300 and even lower.
Trade Strategy
Traders can go long now and on dips at ₹395. Keep the stop-loss at ₹380. Trail the stop-loss up to ₹415 as soon as the contract goes up to ₹430. Move the stop-loss further up to ₹425 when the price touches ₹435. Exit the long positions at ₹345.