Natural Gas Technical Outlook
- Natural gas rallies as bears ease up
- Natural gas price chart highlights an ongoing reversal pattern
Natural Gas Price – Bears Pullback
On June 25, natural gas tumbled to a near 25-year low at $1,517 then rallied after as some bears seemed to cover. On the following day, the weekly candlestick closed in the red with a 10.4% loss while the monthly candlestick closed on Tuesday with a 4.0% loss.
This week, the Relative Strength Index (RSI) rose from 30 to 50 indicating that bears were losing momentum.
Nat-Gas DAILY Price CHART (Nov 2, 2018 – July 2, 2020) Zoomed Out
Natural Gas DAILY Price CHART (March 10 – July 2, 2020) Zoomed IN
On June 10, natural gas pointed lower creating lower highs with lower lows. At the start of this week, the price climbed to the current trading zone $1,655- $1,850 reflecting a weaker bearish sentiment.
A close above the high end of the zone may encourage market participants to rally the price towards $2,050 and any further close above that level may extend the rally towards $2,139.
On the other hand, a close below the low end of the zone signals that the bearish bias is still in place and this may embolden bears to press even lower towards $1,430.
Natural Gas price Four-Hour PRICE CHART (May 25 – July 2, 2020)
On Monday, the price broke and remained above the downtrend line originated from the June 11 high at $1,875, and generated a bullish signal.
Thus, any break below this line would generate a bearish signal while a break above the neckline of the inverted head and shoulders residing at $1,778 would be considered an additional bullish signal.
Thus, a break above $1,790 may trigger a rally towards the high end of the current trading zone discussed above on the daily chart, while any break below $1,609 may send natural gas back towards the June 25 low at $1,518. Nonetheless, the daily support and resistance levels underlined on the four-hour chart should be watched closely.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
