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The natural gas contract on the MCX retains its strength and rallied for the third consecutive month. It surged 9.7 per cent last month to close on a strong note. Strong support is in the ₹225-₹220 region.
The outlook for the contract will turn negative only if it breaks below this support region. But such a strong fall looks unlikely at the moment. The 21-week moving average is on the verge of crossing over the 200-week moving average. This is a bullish signal and it suggests that the downside in the stock could be limited. A rise to ₹280 and ₹290 looks likely.
The level of ₹290 is the 61.8 per cent Fibonacci retracement resistance which may halt the current uptrend. A corrective fall to ₹250 or ₹240 from there cannot be ruled out. Medium-term traders who have taken long positions on dips near ₹225 can hold it. Retain the stop-loss at ₹190 for the target of ₹290. Accumulate on dips near ₹225. Revise the stop-loss higher to ₹230 as soon as the contract moves up to ₹275.
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