Natural Gas: Technical Analysis – Warmer US weather forecast is bullish for natural gas prices

By IFCMarkets

Warmer US weather forecast is bullish for natural gas prices

Natural gas prices rise on warmer US weather forecast. Will natural gas prices continue advancing?

Natural gas prices are rising on warmer weather forecast in most of the US. Higher temperatures are expected to raise power consumption for air conditioning, resulting in higher demand for natural gas for power generation. Higher expected demand is bullish for natural gas prices.

On the daily timeframe the NATGAS: D1 has been rebounding following the rdecline after hitting six-month high in mid-May. The price has fallen below the 200-day moving average MA(200) which has levelled off.

• The Parabolic indicator has formed a buy signal.
• The Donchian channel indicates no trend yet: it is flat.
• The MACD indicator gives a bullish signal.
• The Stochastic oscillator is falling but has not breached into the oversold zone.

We expect the bullish momentum will continue after the price breaches above the upper Donchian bound at 3.11, confirmed also by the fractal high. This level can be used as an entry point for a pending order to buy. The stop loss can be placed below the fractal low at 2.926. After placing the pending order, the stop loss is to be moved to the next fractal low, following Parabolic signals. By doing so, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (2.926) without reaching the order (3.11), we recommend canceling the position: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Position	Sell
Buy stop	Above 3.11
Stop loss	Below 2.926

Market Analysis provided by IFCMarkets