Weekly Chart – Best Week Since October
Natural gas prices rallied an impressive 12 percent last week. It is impressive because you must look at it within the context of persistent losses since August 2022. This was the best 5-day performance since October last year. The broader downside technical bias remains, and the bearish trajectory of a Head & Shoulders chart formation is still in focus. Still, given the bullish performance of late, are prices setting up for a broader reversal? If that happens, could it be enough to overturn the downside bias?
Daily Chart – First Close Above the 20-Day SMA Since December
On the daily chart, natural gas prices turned higher after persistent positive RSI divergence since the beginning of this month. This was a sign of fading downside momentum which can at times precede a turn higher. Prices were unable to hold a close under the 100% Fibonacci extension level at 2.326 after a low was established at 1.967.
Natural gas subsequently turned higher and managed to close above the 20-day Simple Moving Average (SMA). This is significant because we have not had a close above this SMA since December 16th. Confirmation is lacking at the time of publishing. Further upside gains could open the door to extending gains toward the 50-day SMA. The latter could hold as resistance, maintaining the downside bias.
4-Hour Chart – Bearish Rising Wedge Brewing?
Zooming in more on the 4-hour chart shows that prices are trading back in the former range of a bearish rectangle from earlier this month. The lower and upper boundaries are at 2.341 and 2.657, respectively. A closer look reveals that there seems to be a bearish Rising Wedge brewing of late. This could offer an immediate upside bias.
On this timeframe, natural gas has also broken above the 100-day SMA, opening the door to extending upward. With that in mind, while the broader outlook remains bearish, there is an increasing case for a more neutral setting in the week ahead. Depending on how that goes, the picture for natural gas could be starting to change.