Amid uncertain times, natural gas futures traders seem to be unsure about the direction of prices as the futures market met selling sprees on every upward move. Despite more than 90% of positions being on the long side, the futures are testing sub-$2 levels for the third time and appear to be gearing up for an eruptive move.
Undoubtedly, the futures witnessed a fresh low on Friday at $1.948, followed by a 9.5% jump before closing the day with a gain of 5.3%, as I mentioned in my last analysis.
Friday’s closing has raised the importance of opening on the first trading session and follow-up moves by the futures during the upcoming week.
Technically, the 1-hour chart is pointing towards a pivotal point, which could create a gap, either up or down, that would keep the futures in bearish territory during the first few hours if it falls below the immediate support at $2.085.
On the other hand, if the futures start the week with a gap-up opening above the immediate resistance at $2.135, it could push the natural gas futures into positive territory. If it manages to hold above the significant resistance at $2.245, it will confirm the continuity of a bullish trend.
Undoubtedly, the futures have closed the week above 200 DMA in the daily chart, movements by the natural gas futures look to favor the bulls, who are eager to buy every dip above $2, amid hopes of the advent of the typically Atlantic hurricane season that begins on June 1.
According to the first outlook by Colorado State University (CSU), two major hurricanes are expected, or those with wind speeds of at least 111 miles per hour (179 kph), to develop out of six hurricanes and 13 named storms.
However, this year, storms have a higher chance of striking the U.S. Gulf Coast rather than the Atlantic Coast. CSU sees a 28% chance for a Gulf Coast hit and a 22% chance for strikes to the Atlantic coast, which could continue to generate wild price swings in anticipation of disruption in production facilities during the upcoming months.
In the daily chart, the futures are repeating moves from Feb. 23 to Mar. 3, and Friday's closing level could potentially head towards $3 within the next seven trading sessions. Only the opening and closing levels on the first trading sessions will provide the first confirmation for this repetition this time.
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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.
YouTube Video: Natural Gas - Weekly Outlook for April 17, 2023