Natural Gas: Era Of Higher Highs And Higher Lows Amid Energy Embargo
Satendra Singh | May 16, 2022 11:00AM ET
I explained the importance of this week’s opening of natural gas futures in my last article Natural Gas: Opening Could Be Decisive.
Futures started this week with a gap-up opening with a 3% gain, tried to maintain the opening gap amid selling pressure, and finally started an uptrend on Monday – breakout above the recent peak at $8.063 looks to be a preliminary indication of the continuity of current uptrend.
An analysis of the voyage of natural gas since Mar. 15, 2022, with a breakout above 26 DMA – above $4.523 at that time - in a daily chart provides more clarity. Since then futures are maintaining a series of higher highs and higher lows.
Despite changing global geopolitical moves, futures are still following this series of higher highs and higher lows in an uptrend zone. I have encircled these higher highs and higher lows periods in a daily chart below.
Technically speaking, in a daily chart futures have entered a new zone of higher highs and higher lows on May 16 as the energy embargo has changed the demand-supply equation since the Russian invasion of Ukraine.
On Monday, the price tested a fresh high at $8.177 and currently trading at 8.062 which could turn this recent resistance into strong support for the near term as the nat gas price is still sustaining above long-term support at $7.571 that provided a base to the Natural Gas Futures in 2008 before hitting a peak above $13.
This fresh zone for natural gas has a targeted point on the upper side at $9.647 and the lower point of this zone is at $6.430. This higher high and higher low zone starts on May 16 and ends on June 7.
No doubt futures will have to sustain above the mid of the uptrend channel and could hit the top of this zone first before moving downward as the weather looks to be in favor of the bulls along with growing storage phobia among the sanction-imposers of the world – come forward to end the Russia-Ukraine crises.
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 of the world.
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