Natural gas prices should withstand the $3 support
2023.01.22 08:43
Natural gas prices should withstand the $3 support
A weekly chart analysis reveals that, despite an 81-degree drop in natural gas prices over the past nine weeks amid warm weather, this winter appears to be an
Natural gas futures had reached a breakdown below the 200 DMA, which is located at $3.754 on a weekly chart. This sharp fall has caused fear among the bulls, and the selling pressure has increased dramatically as a result.
Despite repeated attempts by the bulls, every rally has ended in a sell-off over the past three weeks, making the 200 DMA a significant resistance level for the bulls.
While the winters still have to pass through a significant portion of this season despite a messy weather pattern for the next six days, $3 is a pivotal point for both the bulls and the bears at this time.
Technically, natural gas futures are currently trading below the 200 DMA on a weekly chart, despite some reversal from the weekly low of $3.091, which is only an initial sign of the strong presence of big bulls below the weekly close of $3.174.
As long as natural gas futures continue to move above or below $3, the next direction that natural gas prices will take will undoubtedly be determined by the weekly opening levels.
A gap-up opening above the immediate resistance at $3.535, followed by sustained moves above this level, could lead to a breakout above the 200 DMA, which would be positive for the bulls.
On the bearish side, natural gas futures could test the next significant support at $2.880 in the event of a gap-down opening below the immediate support at $3.101 and sustained moves below this level.
Despite the odd weather, a sharp reversal could undoubtedly trigger a massive buying spree by the desperate bulls.
As the weather may turn colder from Jan. 28 to Feb. 2, I conclude that the entire focus will be on $3 during the first two trading sessions of the upcoming week.
Disclaimer: This analysis’s author does not hold any Natural Gas futures positions. Any position should be taken with caution by readers; because Natural Gas is one of the world’s most liquid commodities.
