What to Watch: Sideways Trends in Natural Gas

January 31, 2017 5:19AM CST

The trend in Natural Gas is sideways to down. There is resistance at the 3.280-3.350 level, and then at the 3.390 level.  Close in support starts at 3.200, and continues down to 3.110.  A break though the 3.110 mark may signal a run to November’s low of 2.770.   Momentum studies are trending lower with RSI, Slow Stochastics, and MACD all at mid-levels, and heading toward the oversold status. Natural gas is below the 9, 18, and 27 day moving averages, and is a good bet to continue south until some bullish news is injected into the market. Failed support at 3.240 could mean another strong leg down.

The National Weather Service predicts above average temps for the next 10–14 days.  A slide of over 3% this week sets the stage for one of the worst months of trading in a few years.  A draw of 119 bcf for last week’s storage started the current down-trend.  A recovery bounce trying to fill Monday’s gap should fail, signaling deeper sell offs.  A close above the top resistance numbers of 3.390 is needed to negate the current trend and give the bulls control once again.  A cautious bear play is recommended, or moving to the sidelines to wait for the next long entry point.  I can be reached at 888-874-8110 or jratajczak@rjofutures.com for more detail and commentary.

Natural Gas Daily Chart

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