Best Week Since July Offers Near-Term Bullish View

Natural Gas, Strongest Weekly Rally Since Mid-July – Technical Update:

• natural gas Prices rebounded the most since July last week
• This continues to offer a near-term bullish perspective
• Reversing the broader bearish view remains difficult

Weekly Chart – Best week since July

Natural gas prices rose 18.09% last week, marking their best 5-day performance since mid-July. Prices have failed to hold below the March 2021 low of 2.422 for the past few weeks as the heating commodity found support. Now, on the weekly chart below, prices have risen towards the December 2021 low at 3.536. This price could act as resistance and set an inflection point. Despite the short-term shift, the broader technical focus remains bearish.

Chart created with TradingView

Daily chart – looking at the 50-day SMA

On the daily chart, Natural Gas has confirmed a break above the 20-day simple moving average (SMA). Now prices are fast approaching the 23.6% Fibonacci retracement level at 3.2973 as well as the 50-day SMA. This will be a key area to watch over the coming week. If resistance strengthens, it could open the door for a downside turn towards February lows at 1.967. Otherwise resistance will expose 38.2% at 4.1203 before focusing on August long-term declining trendline.

Chart created with TradingView

4 hour chart – Rising Wedge still in play

Zooming in on the 4-hour chart for a better near-term picture, Natural Gas continues to trade within the confines of a bearish rising wedge pattern. The immediate technical bias continues to favor upside as long as the commodity stays inside the wedge. However, in the event of a breakout to the downside, this could open the door to continue the downtrend from late January that lasted into the second half of February. If not, 3.595 Jan 24 peak may be in sight soon.

Chart created with TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com

To contact Daniel, follow him on Twitter:@ddubrovskyFX