Natural Gas Technical Analysis: Positive Expectations
Our positive expectations remain around natural gas, as we expect further upside in its next trade.
Natural gas spot prices (NATURAL GAS CFDS) rose during recent trading to intraday levels. It made fresh daily gains up to the time of this writing of 4.01% to settle at a price of $5.107 per million British thermal units. This will put him on track to register gains for the seventh day. Respectively, after rising 7.94% in trading on Friday, over the past week natural gas spot contracts are up 23.49%.
Natural gas prices settled firmly in positive territory as forecasters warned of a major winter storm expected to form along the US East Coast over the weekend. Natural gas spot prices have increased every week so far in 2022.
Meanwhile, the Nymex contract for February rose throughout the week and settled at $6,265 per million British thermal units on Thursday. This was due to a sharp drop in inventory and a massive rush to buy until expiry, up 57% from the previous week’s close.
Forecasters were expecting strong weather-related demand next week, a potential catalyst for spot prices.
Natural gas futures posted their biggest one-day percentage gain on Thursday, up more than 46%, as the rally was sparked by February contract expirations and a “classic” short pressure at the approach of a winter storm in the northeast.
Technically, the price managed in its recent trades to break above the important resistance level of 4.740, driven by the continued positive support of its trades above its previous 50-day simple moving average. With the influx of positive signals on the relative strength indicators, after reaching earlier areas of severe oversold trades, the price is also affected by the positive support. During its previous trade, it was able to cross a short-term corrective bearish trend line as shown in the attached chart for one period (daily) to approach the attack of the current resistance level of 5.404.
Therefore, our positive expectations remain around natural gas as we expect a further increase in its next tradeespecially in case it breaks through the 5.404 resistance, to target the 6.412 pivotal resistance level.