Natural Gas Technical Analysis: The Price is Dominated by a Bearish Trend

Technically, the main bearish trend dominates in the medium and short term along the slope line, with the negative pressure continuing for its trading below the simple moving average for the previous 50-day period.

Spot natural gas prices (CFDS ON NATURAL GAS) fell during their early dealings on Thursday, to record slight daily losses until the moment of writing this report, by -1.13%. It settled at a price of $2.188 per million British thermal units, after declining during yesterday’s trading by  -4.78%.

Natural gas futures fell on Wednesday for the third time in four sessions, dragged down by spring weather forecasts and strong production levels. Nymex gas futures for April settled at $2.171 per million British thermal units, down about 17.7 cents per day, and fell the contract for the month of May increased by 17.8 cents to 2.307 dollars.

NatGasWeather forecaster said that while cold weather was still expected in late March, both the US and European models show a slight warming in the trading days before Wednesday.

Meanwhile, production has stabilized near 100 bcfd early this week - on par with recent highs and within striking distance of record levels around 102 bcfd. Analysts are divided on whether producers will back off this year. Or not, but most expect production to remain relatively strong with new infrastructure in the works and LNG facilities coming online next year to meet strong export demand from both Europe and Asia.

The market will now focus on the US Energy Information Administration (EIA) Inventories report due for release later on Thursday. After a long streak of bearish indicators this year, analysts are expecting a relatively sharp rally that should reverse last week's brief but the notable blast of cold weather.

Technical Outlook:

  • Technically, the main bearish trend dominates in the medium and short term along the slope line, with the negative pressure continuing for its trading below the simple moving average for the previous 50-day period.
  • This is shown in the attached chart for a period (daily), but in front of that, we notice the start of a positive intersection with the relative strength indicators.  
  • It reached highly oversold areas, which may curb the upcoming price losses.

That is why we expect natural gas to decline during its upcoming trading, as long as the 2.748  resistance remains intact, to target the psychological support at 2.00.

Natural Gas

Akram Adel
Akram has experience working in the Forex industry since 2008. He works as a trainer and lecturer for technical analysis, trading strategies, and foundations of risk and capital management. In addition, he has experience with topics in the financial markets on many well-known sites that specialize in this field. Akram currently writes for a number of sites by providing accurate and professional articles and daily reports.