Natural Gas price has been moving up very well over the last three weeks. The Natural Gas Futures contract traded on the Multi Commodity Exchange (MCX) surged to a high of ₹388.60 per mmBtu last week. It had closed at ₹371 and was up over 14 per cent for the week. However, on Monday the contract opened with a wide gap down at ₹360 and has come down further. It is currently trading at ₹349 per mmBtu.
Outlook
The recent reversal from the high around ₹388 is happening from a key trend line resistance. So, this is significant. Immediate resistance is at ₹360. As long as the contract trades below this resistance, the near-term outlook will remain negative. The MCX Natural Gas Futures contract can fall to ₹330-₹325 in the coming days.
The price action thereafter will need a close watch. A strong bounce from around ₹325 can take the contract up to ₹370 and higher again. But a break below ₹325 will be bearish. It will increase the selling pressure and drag the contract down to ₹300 going forward.
Trade Strategy
Traders can go short now at ₹349. Add more shorts on a rise at ₹355. Keep the stop-loss at ₹363. Trail the stop-loss down to ₹345 as soon as the stock falls to ₹341. Move the stop-loss further lower to ₹338 when the price touches ₹335. Exit the shorts at ₹330.