Natural Gas (NATGAS/USD) Price Technical Analysis for Aug. 5, 2022

Natural gas seems to have completed its pullback to the broken channel resistance on the hourly time frame and is gaining traction on its climb. The Fibonacci extension tool shows the next potential upside targets.

The 38.2% extension seems to be holding as a ceiling around $8.270, but stronger bullish pressure could take natural gas up to the 50% level at $8.371 next. Sustained buying momentum could take price up to the 61.8% Fib at $8.472 or the 76.4% level near the swing high. The full extension is at $8.799.

The 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside or that there’s still a chance the selloff could resume. Stochastic also seems to be turning lower to reflect a return in selling pressure, even before overbought conditions are met.

RSI is already on the move down to show that there is bearish pressure in play, possibly taking natural gas down for another dip to the former resistance zone.

Natural gas got a boost from reports that an LNG export facility in the US is ready for operation, likely lifting sales of the commodity to other regions, particularly Europe. However, the commodity returned some of its recent gains on forecasts of cooler temperatures up ahead.

If this marks the end of the summer season, natural gas could see weaker demand due to lower purchases of cooling commodities. The latest inventory report from the Department of Energy already reflected a larger than expected build in stockpiles of 41 Bcf versus the estimated increase of 25 Bcf.

The upcoming NFP release in the US session would likely spur additional volatility for natural gas since the report tends to impact overall market sentiment. A strong read could confirm that another Fed rate hike is in the works, possibly leading to a selloff for commodities.

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