The November futures contract of Natural Gas on Multi Commodity Exchange of India (MCX), tumbled 6 per cent to ₹211 levels on Monday, tracking the global Natural Gas (Nymex) which has plunged 4.6 per cent to $2.86/mmBtu.
On November 2, the contract fell 2.3 per cent forming a bearish engulfing candlestick, after encountering a key resistance at ₹250. Since then, the contract has been on a short-term downtrend.
While trending down, the contract breached a vital base level of ₹225 that had subsequently turned into a key resistance.
On Monday, the contract tested the resistance at ₹225 and continued to trend downwards. The contract now trades above a key base level of ₹210.
It now trades well both 21- and 50-day moving averages. The daily relative strength index features has entered the bearish zone from the neutral region.
An emphatic break below the immediate support level of ₹210 can drag the contract down to ₹200 which is a psychological support to note. Further slump below this base can pull the contract down to ₹190 over the short term.
On the other hand, key barriers are at ₹218 and ₹226.
A strong rally above ₹226 is needed to alter the downtrend and take the contract northwards to ₹230 initially and then to ₹234.