Natural Gas: Reactionary Moves After Double -Top Formation
2024.11.22 02:35
Upon analysis of the movements by the since I wrote my latest 8on Nov. 19th, 2024, I find that the Natural Gas futures behaved as I predicted as the natural gas prices continued to remain in bullish mode after testing a low at $2.218 on Oct. 10th, 2024 well below the 200 DMA.
This undercurrent continued to push the natural gas futures upward amid increasing hopes that U.S. production will continue to decline in 2024 since the COVID-19 pandemic reduced demand.
Undoubtedly, this equation is likely to reverse since the U.S. Energy Information Administration’s latest outlook indicates that the U.S. natural gas producers will boost output in 2025 following a series of production cuts this year, as rising demand from liquefied natural gas export plants is likely to increase prices that had a fall to multi-year lows.
Most analysts expect that the rising demand for exports should boost average annual gas prices in 2025 by more than 40% over the levels seen in 2024.
This scenario indicates wobbly moves in natural gas futures could continue to influence the prices during the next two months since the natural gas futures moved sharply on Nov.21 before the advent of a sharp decline after the announcement of inventory data on Thursday.
On analysis of the moves by the natural gas futures in the daily chart, I find that the natural gas futures have formed a double top before the advent of the slide amid expectations of increasing production in 2025.
Undoubtedly, the formation of a bearish candle looks for the next confirmation candle. In such a case, the current level looks evident enough to provide a tough resistance to natural gas prices.
Secondly, a breakdown by the natural gas futures below the significant support at $3.093 will confirm the further sliding move that could generate fresh selling to keep the natural gas futures to test the next significant support at 200 DMA during the first week of December this year.
Finally, I conclude that the natural gas futures could sustain at first support at 9 DMA, which is at $3.4, which could result in a bullish move from this level as the second support is at 20 DMA, which is at $2.835. This range can provide sufficient support to natural gas futures this week and only a breakdown below this range could keep the prices in the bearish territory.
Disclaimer: All the readers are requested to take any position in the natural gas at their own risk as this analysis is purely based upon observation. The author of this analysis does not hold any position in the natural gas trading.
