Natural Gas Sees Sudden Price Surge, but Too Weak to Be Relied Upon
2025.01.10 07:01
On analyzing the movements of since this week’s opening, I observed that the undercurrent in natural gas prices could be temporary despite strong weather-driven demand across the United States.
Undoubtedly, this increase in demand coincides with a limited supply due to some production freeze-offs.
Natural gas futures are trading in a narrow range since this Monday, amid concerns over the new energy policies, announced shortly by the President-Elect Donald Trump, who is expected to raise tariffs on European countries if they do not by more and more gas and oil from the US.
Natural gas futures rose on Wednesday due to stronger weather-driven demand but the announcement of inventory on Thursday indicates a much lesser withdrawal this week in comparison of the previous week. I find that the current scineario makes the current strength in natural gas prices too weak to be relied upon.
Undoubtedly, the weather could remain colder in the third week of January might result in wobbly moves by natural gas futures till the closing of this week but I find that this could result in an advent of sudden selling spree during the upcoming week.
Technical Levels to Watch
In the daily chart, formation of a ‘Bearish Doji Star’, despite a surge by the natural gas futures from the lows at $3.455 on Jan. 7, after finding a strong support at 50 DMA, could result in sudden start of a selling spree on Friday.
Undoubtedly, natural Gas futures are teetering at a pivotal point today at $3.384 after testing the day’s high at $3.858, indicates a sharp bearish reversal before today’s closing if not able to find a breakout above the significant resistance at $4.011.
In the 4 Hr. chart, appearance of the beginning of a bearish candle looks evident enough to indicate the growing possibilities of exhaustion in today’s session, the natural gas futures do not sustain above the immediate support at 9 DMA at $3.705.
Take Away for the Traders: Any upward move above $3.945 will provide an opportunity to take a short position with a stop loss at $4.120.
Disclaimer: Readers are requested to take any position at their own risk as this analysis is based upon mere observations.
