Natural Gas: $3 Likely a Pivotal Point for Bulls
Satendra Singh | Jan 22, 2023 01:16
Analysis of natural gas futures in a weekly chart indicates that despite an 81-degree fall in natural gas prices in the last nine weeks amid warm weather conditions at this time of winter seems to be an unnatural move.
This steep fall has propelled fear among the bulls, as the selling pressure has increased manifold, as natural gas futures had found a breakdown below 200 DMA, which is at $3.754 in a weekly chart.
Now, 200 DMA has become a significant resistance for the bulls, as every rally finds a sell-off during the last three weeks despite repeated attempts by the bulls.
On the other hand, $3 is a pivotal point for both the bulls and bears this time, while the winters still have to pass through a significant portion of this season despite a messy weather pattern for the next six days.
Technically speaking, in a weekly chart, natural gas futures are currently trading below the 200 DMA, despite some reversal during the last few hours from the weekly low at $3.091 is merely an initial indicator of the thick presence of big bulls below the weekly close at $3.174.
Undoubtedly, the weekly opening levels will define the further intention of both the bears and the bulls as sustainable moves by the natural gas futures, above or below $3, will confirm the next direction for the natural gas prices.
On the bullish side, a gap-up opening above the immediate resistance at $3.535, followed by sustainable moves above this level, could result in a breakout above the 200 DMA.
On the bearish side, a gap-down opening below the immediate support at $3.101, followed by sustainable moves below this level, could push the natural gas futures to test the next significant support at $2.880.
Undoubtedly, a sharp reversal could generate a heavy buying spree by the desperate bulls despite the odd weather conditions.
I conclude that the whole focus will revolve around $3 during the first two trading sessions of the upcoming week as the weather could turn colder from Jan. 28 – Feb. 2.
Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are advised to take any position at their own risk; as Natural Gas is one of the most liquid commodities in the world.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.