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Natural Gas Price Forecast: A Risk of a Potential Reversal

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 02-07-20 zoomed out

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Natural Gas DAILY Price CHART (March 10 – July 2, 2020) Zoomed IN

Natural gas daily price chart 02-07-20 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.

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Natural Gas price Four-Hour PRICE CHART (May 25 – July 2, 2020)

natural gas four hour price chart 02-07-20

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