The price of Natural gas had registered a channel breakdown on 23rd June, 2011 when it registered a close below the rising trendline which had been acting as good support on corrections.
Since, the breakdown was registered the prices have been trading in a narrow range of Rs 197.50 to Rs 188.50 levels for the past week.
The overall price pattern appears to be taking shape of a Reverse / Bearish Flag pattern.
The Bearish/ Reverse flag pattern breakdown is a continuation pattern and suggests that Index / stock or the commodity prices will continue with its downtrend and move down further after consolidating for a few sessions of trade.
A break below the Rs 188 levels will confirm the bearish flag pattern. The MACD indicator is also trading in bearish mode and the prices have closed below their key moving average clusters.
We recommend traders to sell on a break below Rs 188 levels for downside targets of Rs 183.50 /
Rs 181 levels. A stop loss of Rs 193.75 levels should be maintained on all short positions.
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