Natural Gas Price Setup: Is it Beginning to Build a Base?

NATURAL GAS PRICE SETUP

It may be too soon to conclude that the worst for US natural gas prices is over. But a minor rebound or an extended range is plausible in the interim.

To be sure, beyond the hourly timeframes, the trend remains down across multiple timeframes. Indeed, as arecent update highlighted, a major double-top pattern (the 2022 highs) triggered at the end of last year points to further downside, potentially toward the 2020 low of around 1.45 (see weekly chart).

Natural Gas Weekly Chart

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Moreover, zooming in on the 240-minute charts, there is very little evidence to suggest that natural gas prices are reversing their bearish course. However, tentative signs of an extended consolidation have started to emerge recently.

Natural Gas 240-minutes Chart

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ays are a sign that attempts by bulls to push prices higher have been unsuccessful so far. Despite that prices haven’t made a new low in recent days, unlike the pause in January (where the price had a bearish bias within the range).

Natural Gas Daily Chart

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Given oversold conditions on higher timeframe charts, and improving upward momentum on lower timeframe charts, the recent price action could be a precursor to the start of an extended pause in the slide, or perhaps a minor rebound.

As the 240-minute chart shows, natural gas has been in a sideway range of 2.35-2.65 since the start of the month. Any break above the immediate barrier at 2.65-2.75 (including the Ichimoku cloud on the 240-minute charts) could pave the way toward the 200-period moving average (at about 3.20).

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