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Natural gas futures (continuous contract) on the Multi Commodity Exchange (MCX), which rebounded from ₹190 in mid-June, is now struggling to extend the upswing. Currently, the contract is trading between ₹215 and ₹240.
Though the price action is exhibiting a bullish bias, the contract is facing a resistance at ₹240. Similarly, on the downside, there is a support at ₹215. As long as natural gas futures remain above ₹215, the inclination will be bullish.
If the contract breaks above ₹240, we will most likely witness a swift rally to ₹275—the nearest notable support. Subsequent resistance is at ₹300.
On the other hand, if the contract falls below ₹215, the short-term outlook could turn bearish and we might see a decline to ₹200, which could even extend to ₹190.
In a nut shell, the next swing in price depends on the direction of the breach of the ₹215-240 range.
Trade strategy
Buy natural gas futures if it breaks out of ₹240. Place stop-loss at ₹215 initially.
When the contract rallies past ₹260, tighten the stop-loss to ₹240. Book profits at ₹275.
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