Natural Gas: Bulls Gain Momentum, What's Next?

My last analysis discussed the possibility of a rally in natural gas prices. At that time, many traders failed to anticipate the impact of price consolidation near $2 leading up to May 12, 2023. Despite a rally after Mother's Day, my analysis received significant criticism.

Traders remained convinced of their bearish sentiments due to three consecutive inventory build-ups, disregarding any potential breakout above $2.3. This sentiment persisted even after a price rally on April 14, 2023, when natural gas futures experienced a breakout rally from $2.287 to reach $2.560. However, a subsequent sell-off drove the futures to a low of $2.032 on May 5, 2023.

Since May 5, the low price attracted bullish activity, maintaining dominance in the market until this Thursday, despite a stock build-up of 99 Bcf being announced.

Natural Gas Futures 4-Hour Chart

From a technical standpoint, the 4-hour chart indicates the natural gas futures have exhibited strength since April 14, 2023, when prices tested the season's low at $1.948.

Notably, there was a price rally that pushed the price to a recent high of $2.560 on April 28, 2023, followed by a sell-off. However, this time the low was at $2.148, signaling a reluctance among bears to keep the price below the $2 level.

Moreover, favorable weather conditions have supported bullish sentiments, which became more apparent after Mother's Day. This prediction was based on an in-depth analysis of a bullish crossover, with the 9 DMA and 18 DMA crossing above the 200 DMA on May 12, 2023.

Natural Gas Futures 1-Hour Chart

Examining the 1-hour chart, the strength of the price trend is evident through higher highs and higher lows within an uptrend channel since May 5, 2023. This trend is expected to continue, with the 200 DMA providing significant support in case of any downward movement in natural gas futures throughout this month.

In conclusion, if the natural gas futures can maintain a price above $2.493 until the end of this week and into the opening of the upcoming week, we are unlikely to witness the same low levels as before. The bullish sentiment has ensured that any dip below $2.5 since the beginning of this week has received significant buying support.

Furthermore, if prices can remain above the significant resistance level at $2.561 before the end of this week, the trend is likely to favor the bulls.

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Disclaimer: The author of this analysis does not have any position in natural gas futures. Readers should take a trading position at their own risk, as natural gas is one of the most liquid commodities in the world.