- Natural gas futures tested a multi-year high on Friday at $5.248.
- Hurricane Nicholas heads towards Texas and Louisiana
- A bullish move above double-top formation in a weekly chart could increase the pace of exhaustion.
- A sustainable move by natural gas futures below $5.079 will be the first confirmation of the advent of exhaustion.
Despite a higher injection on Thursday, natural gas bulls remained eager to cross the psychological resistance at $5 and finally tested a multi-year-high at $5.239 on Monday. Undoubtedly, this move seems to be evident enough to show the weather-related support to bulls from the last four weeks when natural gas futures started this current rally after testing a low at $3.734 in mid-August this year.
But I find that this bullish trend could vanish soon as the supply and production tend to normalcy this week. A sustainable move below $5.079 will be the first confirmation of the advent of a steep slide in natural gas futures. Undoubtedly, big bears tend not to miss the opportunity to load short positions at the current levels as the upside is limited, but the downside could be limitless.
Although Hurricane Nicholas has started to move towards Texas and Louisiana, any diversion of its defined route could deviate the currently prevailing bullish sentiments. Shortly, big bears could enter into short positions that could be too sumptuous for them at this time of the year. Undoubtedly, some of them have already taken an entry at 09:00 A.M. on Sept. 13, 2021.
Disclaimer: The author of this analysis does not have any position in natural has futures. Readers are advised to take any position at their own risk; as natural has is one of the most liquid commodities of the world.