Natural gas prices have been under pressure since the beginning of this month. The price has tumbled over 28 per cent in the last two weeks. The Natural Gas futures contract trading on the Multi Commodity Exchange (MCX) has declined sharply by about 15 per cent so far this month. It is currently trading at 151 per mmBtu.
Outlook
The outlook is bearish. The MCX Natural Gas futures contract has strong resistances at ₹162 and then at ₹168. Any intermediate bounce is likely to be capped at ₹162 or ₹168.
The Natural Gas contract can fall to ₹115-112 over the next one-two months, or even earlier than that.
The region between ₹115 and ₹112 is a strong long-term support. We can expect the contract to see a fresh rise from this ₹115-112 support zone. That leg of the rally may have the potential to take the Natural Gas futures contract up towards ₹200 again over the long-term.
Trade Strategy
Considering the room to fall more from current levels, a positional trade with a time frame of one month can be taken at the moment. We suggest the following trades for high-risk appetite traders only.
Traders can go short now. Accumulate on a rise at ₹151. Keep a stop-loss at ₹169. Trail the stop-loss down to ₹146 as soon as the contract falls to ₹134. Move the stop-loss further down to 130 when the Natural Gas futures price touches ₹122 on the downside. Exit the shorts at ₹115.
