Natural Gas Trending Down, Weather to Blame? | RJO Futures

February 15, 2017 2:10PM CST

The trend in natural gas is down.  Prices have been retreating for the past week.  With unseasonably warm weather patterns expected throughout the end of February, natural gas may struggle to hold the 2.900 mark.   Temperatures at or near the 60 degree mark should extend over two thirds of the country, with no end in sight.  Clear skies and sunshine are reported going into the next week.    

The close beneath the 9, 18; and 27-day moving averages confirm the downtrend. RSI, MACD, and Stochastics are all approaching oversold levels, but until we see a divergence in the price action it simply indicates the market is trading strongly in this direction.   COT information shows the funds are still long over 100,000 contracts.  This can be troublesome, as stops are hit or they decide to liquidate their positions. 

Resistance is right around the 3.000 level.  Then about 3.200 and above.  A close above 3.000 might spark the bull market.  Until then, any bounces should be viewed as opportunities to sell.  A close south of 2.900 is bearish and could signal a greater leg down.  I would suggest exposure to short side.  Either short the contract or owning puts. 

 

Natural Gas Daily Chart

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