Technical analysis of natural gas prices (NATGAS / USD) and attempts not to break an important psychological support
The natural gas market is in a weaker position after the US Department of Energy reported a smaller decline of 72 bcf compared to the estimated reduction of 75 bcf. However, this was larger than the previous draw of 58 bcf, indicating that demand remains supported. In total, US supplies are 1.9 trillion cubic feet, up 504 billion cubic feet from the same period last year. It is also 351 billion cubic feet more than the five-year average of 1.549 trillion cubic feet.
Today, the natural gas price (NATGAS / USD) is stable between the level of $2.21 and the level of $2.32 per million British thermal units. Natural gas prices are preparing for a weekly decline of more than 7%, in addition to their decline since the beginning of the year 2023 to date by 44%.
However, weaker buying may be imminent, as warmer temperatures across the US are likely to sap demand for heating staples. And that may be the case for the next couple of months or so, as the summer season rolls around.
Risk sentiment could also push commodity prices for the rest of the week, especially as the shaky banking sector and contagion fears remain in focus.
Gas technical analysis: Natural Gas Price (NATGAS/USD) formed slightly lower highs and lower lows within a falling wedge pattern, and it looks like a breakout is imminent soon. The consolidation has become tighter with the commodity price approaching the peak of the formation, but the technical indicators are giving mixed signals on the direction.
The 100 SMA is below the 200 SMA to indicate that the overall trend is still down or that the support is more likely to break rather than hold. And if that happens, the price of natural gas could fall as high as the wedge pattern. The gap between the moving averages is also widening to reflect strengthening selling pressure, and the dynamic 100 SMA inflection point is near the top of the wedge adding to its strength as a ceiling.
However, Stochastic is just starting to rise from the oversold area to indicate that the bullish momentum might pick up. Sustained bullish pressure could lead to a break above the wedge resistance around $2,100 and a rally of the same size as the formation. Meanwhile, the RSI appears to be moving sideways to reflect current neutral conditions, barely providing solid clues to direction.
This chart is from platform tradingview
