Black Friday Sale! Save huge on InvestingProGet up to 60% off

Natural Gas: Indecisive Trend Likely to Spark Rally After Mother’s Day

Published 12/05/2023, 12:59 am
NG
-

This week, movements in natural gas futures indicate a sudden increase in uncertainty among traders as they struggle to break above the 200 DMA on the upper end of the one-hour chart, while also attempting to maintain their position above the gap that was created at the beginning of the week.
Natural Gas Futures Daily Chart - From Nov. 5th 2019 to Aug. 28th 2020
Observing movements across various time frames, I noticed the same behavior in the daily chart from Nov. 5, 2019 to Aug. 28, 2020, while prices hit a low at $1.432 on June 26, 2020, before hitting a high at $2.740 on Aug. 28, 2020; meanwhile, they traded at $1.827 on May 11, 2020.

Now, the point is to note the post-inventory announcement directional move on May 11, 2023. This movement is likely to add further uncertainty regarding the future direction of prices, particularly as the hottest days are expected to be from Mother's Day weekend through Tuesday in western Washington and western Oregon, which includes Seattle and Portland, as reported by weather.com.

It's true that the presence of high pressure could potentially create concerns about a hurricane in the near future, especially given that the U.S. hurricane season is set to begin on June 1, 2023. However, the ongoing uncertainty surrounding the weather patterns may lead to significant price fluctuations until the end of this trading week.
Natural Gas Futures 1 Hr. Chart
In the 1-hour chart above, natural gas futures are struggling to find a breakout above the 200 DMA, which is at $2.213 on the upper side, while on the lower side trying to hold above the weekly gap that was created at the opening of this week.

This price behavior has increased uncertainty as traders fear a repetition of the same movement witnessed from Nov. 5, 2019, to Aug. 28, 2020.

I conclude that if natural gas futures hold above $2.111 until this weekly close and at the opening of the upcoming week, we will not witness the same low levels as the last time, as bullish sentiment has ensured that any dip below $2 since the beginning of this year has found significant buying support.

Furthermore, if prices hold above the significant resistance at $2.561 before this weekly close, the trend is likely to tilt in favor of bulls.


Disclaimer: The author of this analysis does not have any position in natural gas futures. Readers should take a trading position at their own risk, as natural gas is one of the most liquid commodities in the world.

Latest comments

Loading next article…
Risk Disclosure: 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.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.