Natural gas prices have been under pressure over the last few weeks.
The Natural Gas futures contract on the Multi Commodity Exchange (MCX) made a high of ₹209 per mmBtu on June 28 and has come-off sharply from there.
The contract has tumbled over 10 per cent from the recent high and is currently trading at ₹188 per mmBtu.
Outlook
The contract is currently taking support from ₹187 and has been hovering above this level over the last few days.
However, the overall view remains negative. The indicators on the chart are giving bearish signals.
The 21-day moving average has crossed below the 55-day moving average. This is a negative sign indicating that the upside could be limited. Resistance is in the ₹195-₹196 region which is likely to cap the upside in the near term.
If the contract manages to sustain above ₹187, an intermediate bounce to test the ₹195-₹196 resistance region is possible.
However, further rally beyond ₹196 is unlikely.
Further break
An eventual break below ₹187 can drag the contract to ₹185 initially. Further break below ₹185, will then increase the likelihood of the contract extending its fall to ₹180 over the short-term.
The bearish outlook will get negated only if the contract manages to breach ₹196 decisively.
In such a scenario, fresh buying interest can emerge in the market and the contract can rally to ₹200 and ₹205.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.