Natural Gas: Price Swings Likely Despite Surging Bearish Sentiments
2023.03.27 03:43
Movements by during the last week indicate that price swings are likely to continue despite winter coming to an end, and production phobia still exists alongside supply disruption.
Natural gas futures posted a third straight weekly loss last week but the low was above lows tested during the past three weeks, indicating significant support at $2 as futures witnessed buying at lower levels despite many odds against the bullish sentiments.
U.S. natural gas futures hit a low at $2.114 on Feb. 22 after facing stiff resistance at $2.6 between Feb. 7 to 16, 2023, but resumed bullish momentum that continued till Mar. 3, which pushed them up to $3.
Natural Gas Futures 1 Hr. Chart – From Feb. 22 – Mar. 3, 2023
Technically speaking, in an hourly chart, futures closed last Friday at the same levels from where they witnessed a rally on Feb. 22, 2022.
Natural Gas Futures 1 Hr. Chart
In the daily chart, they are still trading in the oversold territory where the immediate resistance is at 9 DMA, or $2.331, and next is at 18 DMA, or $2.497.
Natural Gas Futures Daily Chart
Hedge funds become active when traders feel confident about the short-term direction without any supportive or negative news.
Natural gas bulls were convinced enough about the direction, while futures were trading at $7 after hitting a 14-year peak of $10 on Aug. 23, 2022.
Finally, I conclude that futures could continue to find buying support above the significant support at $1.965, despite surging bearish sentiments, and could generate fresh rallies to cross the next psychological resistance at $3.
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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.
