The Price of Natural Gas Finds Support. But for How Long?
On 21 June, we wrote that the trend in the market was weakening, noting that:
Forecasts of a hotter summer, published during April-May, led to a sustained bullish trend in the natural gas market.
According to the technical analysis of the 4-hour XNG/USD chart and the signs of weakness that have formed on it, the level of 3.160 appears to sufficiently account for the risks of an extremely hot summer.
Bears might push the price to the lower boundary of the ascending trend channel.
Since then, the price of natural gas has:
tested the median of the ascending channel (shown by an arrow), which acted as resistance;
broken the lower boundary of the channel;
dropped to the level of 2.06 amid news of sufficient natural gas reserves in storage.
And, as the XNG/USD chart shows today, it is this level that is now forming signs of support for the market:
the lows A-B appear to be elements of an incomplete double bottom pattern;
the level of 2.06 acted as resistance in March-April, so support here is anticipated by technical analysts.
But can the bulls reverse the trend?
In the near future, the price of natural gas may consolidate within a narrowing triangle, formed by the support at 2.06 and the descending trend line (shown in red). It is possible that failures in any attempts to break through the red line will lead to a resumption of the downward trend and a subsequent decline in price towards the support at 1.875.
Read more: https://fxopen.com/blog/en/oa-the-price-of-natural-gas-finds-support-but-for-how-long/
Text source: Forex Trading Blog
