Natural Gas Futures hit a fresh low last Friday at $3.384 as the prevailing warm weather helped the bears to continue their selling spree after testing the day’s high at $3.760.
Thursday’s bearish inventory announcement added one more leg to the warm weather impact on natural gas prices. But still, the last weekly closing at $3.481 could not be a lone parameter to map the short-term direction of natural gas futures during the upcoming weeks.
Abnormality hovers due to the unnatural behavior of natural gas futures during this winter season.
The fresh low on Friday increased suspicion among the bulls as the changing weather outlooks still define warm weather conditions likely to continue till Jan. 24th.
This year could continue selling pressure as every upward move by natural gas futures will raise skepticism among the bulls over the strength of momentum till the cold weather outlook comes.
Undoubtedly, low trading volumes could follow the movements of natural gas futures in a tight range as the wild price swings could extend volatility during the upcoming week, enhancing the importance of the weekly opening levels on the first trading session of the week.
Despite a sudden surge in selling pressure just before the last weekly closing, I believe a gap-up could follow the weekly opening.
Undoubtedly, a weekly gap-up opening above $3.769 could generate a selling spree. Only a sustainable move above this level could turn the trend upward because still, a significant part of this winter is due to some weather experts expecting that chilled weather conditions could start in the last week of January.
On the other hand, if natural gas futures start the upcoming week with a gap-down opening and hold the next significant support at $3.159, that could attract big bulls to start buying.
I conclude that the weekly opening levels and follow-up moves during the first two trading sessions will provide some clues for traders.
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.