Upon analyzing the movements of the natural gas futures since I wrote my last analysis on Apr. 24, 2025, I anticipate that the natural gas futures signals some probable reversal despite the negative fundamentals could provide a good opportunity to load shorts as this reversal seems to be a false reversal. At the same time, the demand for summer cooling is still distant.
Undoubtedly, this reversal is only a technical bounce from the lower levels, and the natural gas futures are trying to sustain above the 200 DMA at $3.263, just below the significant resistance at the 20-day Exponential Moving Average (EMA) at $3.435.
Natural gas futures are still under bearish pressure since the formation of a bearish crossover with a downward move by 9 EMA and 20 DMA after piercing 100 EMA, indicating a long-term bearish trend.
On the other hand, the denting impact of Trump’s first 100 days in office has generated only self-destructive police,s which are likely to result in a long-term supply crunch, after the declaration of his energy emergency during this period, resulting in a surge of gas stockpiles and higher production costs.
Secondly, natural gas demand could remain lower at this time amid spring in comparison to the previous year, before the advent of fresh cooling demand in coming summers that could be delayed to this time.
Technical Levels to Watch
In the daily chart, natural gas futures could move upward only if hold above the immediate resistance at $3.380; and this move will provide a good opportunity to load shorts at the next significant resistance at 20 EMA at $3.435 with a stop loss at $3.716 with a target at $2.492 for May-June, 2025.
Inversely, if the natural gas futures find a breakdown below the significant support at the 200 EMA at $3.263 and sustain below the next support at $3.263, the decline could be steeper than ever before.
Undoubtedly, natural gas futures could remain extremely volatile at the lower levels in order to sustain above the 200 EMA, but the overall trend is likely to remain bearish under Trump 2.0, as the policy changes on the energy front could remain indecisive for managing the economic damage.
Disclaimer: Readers are advised to take any position in natural gas futures at their own risk as this analysis is based only on the observations.