Unnatural Moves by Natural Gas Extend Suspicion Among Traders, What Next?
Satendra Singh | Jan 15, 2023 18:52
Natural Gas Futures hit a fresh low last Friday at $3.384 as the prevailing warm weather helped the bears to continue their selling spree after testing the day’s high at $3.760.
Thursday’s bearish inventory announcement added one more leg to the warm weather impact on natural gas prices. But still, the last weekly closing at $3.481 could not be a lone parameter to map the short-term direction of natural gas futures during the upcoming weeks.
Abnormality hovers due to the unnatural behavior of natural gas futures during this winter season.
The fresh low on Friday increased suspicion among the bulls as the changing weather outlooks still define warm weather conditions likely to continue till Jan. 24th.
This year could continue selling pressure as every upward move by natural gas futures will raise skepticism among the bulls over the strength of momentum till the cold weather outlook comes.
Undoubtedly, low trading volumes could follow the movements of natural gas futures in a tight range as the wild price swings could extend volatility during the upcoming week, enhancing the importance of the weekly opening levels on the first trading session of the week.
Despite a sudden surge in selling pressure just before the last weekly closing, I believe a gap-up could follow the weekly opening.
Undoubtedly, a weekly gap-up opening above $3.769 could generate a selling spree. Only a sustainable move above this level could turn the trend upward because still, a significant part of this winter is due to some weather experts expecting that chilled weather conditions could start in the last week of January.
On the other hand, if natural gas futures start the upcoming week with a gap-down opening and hold the next significant support at $3.159, that could attract big bulls to start buying.
I conclude that the weekly opening levels and follow-up moves during the first two trading sessions will provide some clues for traders.
Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are advised to take any position at their own risk; as Natural Gas is one of the most liquid commodities in the world.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.