US Natural Gas at lowest level since August 2020
The price of Natural Gas CFDs traded to their lowest level since August 2020 as price broke through 2.262 this week. During the week of December 12th, 2022, price reached a high of 6.882. Since then, NATGAS prices have fallen dramatically, dropping nine of the last 10 weeks prior. This week’s low, thus far, is 2.064. However, if price can close at or near 2.369 for the week, the weekly candle will have formed a hammer formation, indicating the possibility of a bounce. In addition, notice that the RSI is in oversold territory at 29.05. This also indicates that price may be oversold, and a bounce is ahead. Price is approaching additional support levels from 2020. The first level is horizontal support from July 2020 at 1.952. Below there, support crosses at the lows from June 2020 at 1.5828.
Source: Tradingview, Stone X
On a daily timeframe, it may be possible that a reversal has already begun. On Wednesday, the price of NATGAS formed a bullish engulfing pattern. In addition, notice the RSI on the daily timeframe is diverging with price. That is to say that the RSI is moving higher while price has still be moving lower. In addition, price has formed a descending wedge and today price broke above the top trendline of the wedge. The target for the break of a descending wedge is a 100% retracement, or 2.642. However, resistance is very near. The first level is the bottom of a series of days over the last 2 weeks near 2.426. Above there, NATGAS can move to the highs of February 8th at 2.727, then the highs of January 24th at 3.480.
Source: Tradingview, Stone X
The price of Natural Gas has moved a long way in a short amount of time. But is it ready to reverse? Some of the technical indicators look like the commodity is oversold. Perhaps a correction is ahead.
--- Written by Joe Perry, Senior Market Strategist
Follow me on Twitter at @JoeP_FOREXcom
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