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Natural Gas prices have been in a strong downtrend since mid-June this year. The Natural Gas Futures contract traded on the Multi Commodity Exchange (MCX) touched a high of ₹261.20 per mmBtu in June. From the price has tumbled about 25 per cent. The contract is currently trading at ₹194.50 per mmBtu.
Outlook
The trend remains down and strong. Strong resistances are at ₹200, ₹203 and then at ₹205. So broadly, the ₹200-205 zone will be a very good resistance that can cap the upside. The MCX Natural Gas futures contract can fall to ₹185-₹182 in the coming days.
But looking at the recent price action on the daily charts, a sideways consolidation looks possible before the overall downtrend resumes. The contract can oscillate in a range of ₹192-205 for some time. Eventually, the contract can break ₹192 and fall to ₹185-182.
To ease the downside pressure, the Natural Gas futures contract will have to rise past ₹205. That can take it up to ₹210. But that will just be a corrective rise and the broader downtrend will continue to remain intact.
Trade Strategy
Traders can go short now at ₹194. Accumulate on a rise at ₹198 and ₹202. Keep the stop-loss at ₹206 initially. Trail the stop-loss down to ₹192 as soon as the contract moves down to ₹188. Revise the stop-loss lower to ₹187 when the price touches ₹184. Exit the shorts at ₹182.
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