Natural Gas (NG) Charts Point to a Rally
Natural Gas Technical Highlights:
- Big decline has support in play, price action is strong
- Sizable rally could develop following flush of 200-day
Natural gas declined nearly 40% from its yearly high just as the new week began. The decline brought into play the 200-day moving average and a trend-line dating to February. The strong reaction around the 200 suggests a low could be in. Looking at the hourly chart the action around the 200-day played out as a wedge formation that failed to follow through, and is in the process of getting broken in the opposite direction. Failed continuation patterns often lead to strong reversals in the opposite direction, especially when they occur around major levels. Looking higher, there is resistance around 7.23, 7.40, and 7.55. It wouldn't be surprising, though, to soon have gas trading in the 8s. A sustained breakdown below the weekly low at 6.30 would put nat gas back on its heels.
Natural Gas Daily Chart
Natural Gas Hourly Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.