Natural Gas Plunges, But Bears Should Remain On The Sidelines
Satendra Singh | Jan 13, 2022 09:48PM ET
On Thursday, natural gas futures lost 12% despite a supportive weekly inventory announcement that shows the withdrawal of 179 Bcf.
Undoubtedly this fall has turned the short-term momentum slightly negative, but the overall trend is still bullish.
Despite a steep fall, the natural gas futures are still holding above the 200-days moving average in a daily chart that shows the reluctance of the natural gas bulls not to give up easily.
On the lower side, 200 DMA would continue to provide support while, on the upper side, $4.889 could continue to provide stiff resistance. I find that only a breakout or a breakdown out of this range could signal a directional move.
On the weather front, the natural gas futures could continue to find support from the colder pattern in the United States that could generate blasting moves during the upcoming weeks.
The weather outlook could continue to increase the national demand for natural gas that could negate the oversupply issue for the time being.
Undoubtedly, this weekly closing level will play a sizable role in deciding the further directional move by the natural gas futures.
I find that the price pattern during the last few trading sessions indicates that the natural gas futures could close this week above the level of $4.622.
Despite a steep fall, the natural gas futures are trading above the lower end of my expected trading zone that I set for this Thursday that ensuring a sharp reversal on Friday.
A bouncing move by natural gas in today’s trading session above $4.348 will confirm the advent of this reversal that may continue on the first trading session of the upcoming week.
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On the downside, if the natural gas futures close this week below $4.189, that could confirm a steep fall to keep the natural gas prices under bearish pressure during the upcoming weeks.
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