Natural gas futures (continuous contract) on the Multi Commodity Exchange (MCX) has been held in a range over the past several weeks. The contract has largely been oscillating between ₹207 and ₹227 in the recent weeks. Until either of these levels are breached, the next leg of trend will remain uncertain.
As it stands, the range is valid and so, we expect the contract to rebound from the current level of ₹212. Or probably, it might fall to ₹207 from here and then see an up move. In such a case, the natural gas futures might rise back to the range top of ₹227.
If the bulls get stronger possibly leading to the breakout of ₹227, the upswing can extend to ₹240.
On the other hand, rather than a bounce, if the contract breaks below the support at ₹207, natural gas might slip below the ₹200-mark and fall to ₹190.
Nevertheless, as it stands, the support at ₹207 holds true, keeping the chances high for a rally.
One can buy natural gas futures at the current level of ₹212 and add more longs if the price dips to ₹207. Place initial stop-loss at ₹200.
When the contract recovers as expected and moves above ₹220, tighten the stop-loss to ₹212. Liquidate the longs at ₹227.