The short-term outlook for the Natural Gas Futures contract traded on the Multi Commodity Exchange (MCX) is bullish.
The sharp fall from the high of ₹692.5 per mmBtu made in the first week of this month was short lived.
The contract made a low of ₹505.9 on Tuesday last week and has been moving up since then. It is currently trading at ₹607 per mmBtu.
Though the broader trend is still up, the recent bounce seems to lack momentum.
The chances of a dip to ₹560-₹550 and even lower cannot be ruled out before a further rise happens.
On the weekly chart, ₹500-₹700 looks to be the broad trading range. Within this range, the contract is now poised at the middle of this range. Also, there are equal chances of either going up from here itself or see a dip first and then rise again.
Traders can stay out of the market for now. However, make use of dips to go long at ₹580 and accumulate at ₹540.
Keep the stop-loss at ₹490. Trail the stop-loss up to ₹610 as soon as the contract moves up to ₹640.
Move the stop-loss further up to ₹645 as soon as the contract touches ₹670. Book profits at ₹690.
From a medium-term perspective, a breakout on either side of ₹500-₹700 will determine the next leg of move.
A break above ₹700 will be bullish to see ₹800-₹900 levels on the upside. On the other hand, a break below ₹500 will be bearish and will indicate a trend reversal. Such a break can drag the contract down to ₹350-₹300.