Natural Gas: Could Bulls Survive Above $4 Despite Favorable Weather
2025.01.13 06:53
On analyzing the moves by the since this opening, I observed that despite a gap-up opening, natural gas futures could not sustain above the significant resistance at $4.201 due to the thick presence of big bears at this point.
Undoubtedly, the market’s response to last week’s below-average storage withdrawal was subdued, as larger inventory reductions are anticipated in the upcoming weeks.
However, natural gas prices are driven by short-term factors such as weather and international demand. Still, the fear of President-Elect Donald Trump’s energy policies could continue to hover, as he has pledged to impose higher tariffs on European countries and some Asian countries that trade with Iran.
On the other hand, Trump wants to keep the US currency stronger which could continue to reduce demand for US natural gas as he also favors the use of fossil fuel and wind energy.
Secondly, a short-term factor for this spike in natural gas prices could be a sudden surge in buying by India, China, and other countries ahead of what could be the sanctions coming down on both Iran Russia, and Venezuela after President Trump joins his office on Jan. 20, 2025.
Technical Levels to Watch
In the weekly Chart: natural gas futures closed the last week above a significant resistance at the 200 DMA, resulting in a gap-up opening this week, but if natural gas futures could not sustain above the next important resistance at $4.201 due to the thick presence of big bears.
Since this weekly opening, the natural gas futures have started to continue on a steep sliding path which indicates selling sprees to continue during the upcoming weeks till the traders find some clearance over Trump’s tariffs policies.
At this point, first support for natural gas futures could be seen at the 200 DMA at $3.881 but a breakdown below this could regenerate fresh selling sprees to push the natural gas futures to test the next support at 9 DMA at $3.489.
In the Daily Chart: natural gas futures could not sustain above the significant resistance at $4.201, and continued to slide downward which resulted in the formation of a bearish ‘Doji Star’ which could generate a fresh selling spree.
Undoubtedly, if the natural gas futures could not hold the next significant support at $3.401 in today’s session, bearishness could surge despite the announcement of cold weather.
Take Away for the Traders
I find that the natural gas futures could continue to generate wobbly moves till the joining of President-Elect Donald Trump on Jan. 20, 2025. Only after some clearance on his energy policies, are final directional moves likely to be defined.
Disclaimer: Readers are requested to take any position in natural gas at their own risk as this analysis is purely based on the observations.
