Natural Gas: Breakout Likely This Week
Satendra Singh | Jul 11, 2023 08:37
Natural Gas futures witnessed a sell-off soon after the announcement of weekly inventory last Thursday, which showed an addition of 4bcf to supplies. The selling spree continued last Friday after the announcement of Baker-Hughes rigs count that showed a significant jump in rigs by 11 during the week.
I find that the expectations of changing weather outlook resulted in a gap opening this week. According to natgasweather.com reports,
"Hot high pressure will rule the southern, western, and eastern U.S. with highs of upper 80s to 100s for strong demand, hottest California to Texas. The Midwest/Great Lakes will be comfortable as weather systems sweep through with showers and highs of 70s to mid-80s from July 11-17."
On observing the movements of futures in different time frames, I find that it could take a significant upward move despite some odds on the supply and demand fronts. I conclude that a sustainable move above $3.2 will be the first confirmation of this breakout, possibly during this week.
In the 1-hour chart, futures are showing good strength on Tuesday since the weekly opening with a gap-up. After finding significant buying support at $2.547 on July 7th, 2023, a reversal above $2.718 enhanced the expectations of the bulls to hit their immediate target at $3 as futures are sustaining above the 200 DMA after the formation of a bullish crossover.
In the 4-hour, chart, natural gas futures are sustaining above the weekly opening gap on Tuesday, as the formation of a bullish crossover looks evident enough to keep the prices in an uptrend zone - which futures have been maintaining since June 2, 2023, when they hit a low at $2.140.
Finally, I conclude that any downward move by natural gas futures will provide an opportunity to go long above $2.548. On the other hand, an upward swing above $3.5 will be an opportunity to sell.
Disclaimer: The author of this analysis does not have any position in Natural Gas futures. All the readers are advised to take any position at their own risk; as Natural Gas is one of the most liquid commodities in the world.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.