Natural Gas: New Lows Spook Bulls
Satendra Singh | Apr 18, 2023 10:51AM ET
Movements by natural gas futures since Apr. 14, 2023, while hitting a new low at $1.945, indicate a tilt in the waking habit of the natural gas bulls.
This looks evident enough to show a similarity with the beginning of fresh buying sprees soon after the bell rings at 8 a.m. in the U.S.
This regularity might be a coincident or a deliberately chosen time between 08:00 – 10:00 a.m. by a particular Hedge fund that decides its moves at this point.
However, this has pushed the prices approx. 16.87% at 08:30 on Apr. 18, 2023, from the low tested on Apr. 14, while I have been writing this article, despite some selling pressure.
I pointed out this expected reversal well in advance when I wrote my article on Apr. 14, while the traders were skeptical about any inflection in bearish sentiments.
Bears were in full swing amid favorable news flow on the weather front and supply issue. But the sentiments took a U-turn with changing news flow about the expected surge in cooling demand and the expected production disruption, as I mentioned in my last article.
Undoubtedly, if the bulls continue their timely wake-up, the futures could hit $2.796 after this week’s inventory as the buying is visible on every downward move, as price swings are likely to keep the traders indecisive up to the advent of a short-covering rally.
At this crucial point in time, the best strategy could be to short one lot of May 23 in case of a steep upward move above $3.767 and buy one lot of Jul. 23 in case of a steep fall below $2.2 and 1 lot at sub-$2 levels. Undoubtedly, this strategy might be risky as the buying in Jul. 23 futures looks to favor this strategy with a vigil eye on the news flow.
Technically, in the 15-Minute chart, futures look ready to hit the next target at $3.6, as buying support has shifted from $2.188 to $2.288, and is holding above the 200 DMA at $2.198.
In the 1-hr. chart, movements by natural gas futures look quite supportive as the hourly candles still look bullish above the 200 DMA, which could push futures above the immediate resistance of $2.348.
Get The News You Want
Disclaimer: The author of this analysis does not have any position in natural gas futures. Readers should take a trading position at their own risk, as natural gas is one of the most liquid commodities in the world.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.