Natural Gas: Futile Attempts to Sustain Above $4 Could Keep Bears on Top
2024.12.31 03:28
have shown strong bullish momentum since last Friday, driven by heightened uncertainty surrounding a potential halt of Russian gas supplies to Europe. The ongoing delay in signing a new transit deal has attracted bullish activity in the market.
Friday’s inventory data revealed a smaller-than-expected withdrawal, further intensifying the impact of the deepening gas transit dispute. If the transit deal faces additional delays, natural gas futures could continue to climb despite struggling to sustain levels above $3.978.
However, with natural gas futures trading in overbought territory, bearish pressures could emerge. Resolving these geopolitical concerns may limit further gains. Additionally, forecasts for milder weather in the coming weeks could cap upside potential.
The inauguration of President-elect Donald Trump on January 20, 2025, may introduce significant shifts in energy policies, providing further clarity on the market’s direction. Until then, expect heightened volatility fueled by geopolitical tensions and speculation.
Technical Analysis: Key Levels to Watch
Weekly Chart
Natural gas futures face resistance near the 200 DMA at $3.869, despite multiple attempts to break higher. While the 9 DMA and 20 DMA have crossed above the 100 DMA at $2.518, forming a bullish pattern, the 200 DMA remains a critical hurdle.
Daily Chart
On December 30, 2024, natural gas futures climbed from $3.647 to $4.202 but closed at $3.948, underscoring $3.948 as a key resistance level. As of December 31, futures are trading at $3.797 after testing a high of $3.974.
The 9 DMA and 20 DMA have formed a bullish crossover, providing support at $3.599 and $3.343, respectively. Immediate resistance is at $4, with a secondary resistance level at $4.202.
Conclusion: If the natural gas futures are not able to sustain above $4.202 during this week, a steep slide could start from the current levels.
Disclaimer: Readers are requested to create any position in natural gas at their own risk, as this analysis is purely based on the observations.
