Natural Gas (NATGAS/USD) Price Technical Analysis for Jan. 21, 2022

Natural gas is trending lower on its hourly time frame and might be due for a pullback to a newly-forming descending trend line. The Fibonacci retracement tool shows more levels where sellers might be waiting.

The 38.2% level is at $4.047 and the 50% level is at $4.121 near the trend line. A larger correction could reach the 61.8% Fib at $4.194 near the 100 SMA dynamic resistance.

On the subject of moving averages, the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse.

Stochastic is heading higher, though, so buyers might just be returning from here. The oscillator has plenty of room to climb before reaching the overbought area, so bullish pressure could stay in control for a bit longer.

Similarly RSI is just starting to pull up from the oversold region to suggest a pickup in bullish momentum that could last until overbought conditions are met.

Natural gas storage fell by 206 Bcf versus the estimated draw of 190 Bcf and the earlier reduction of 179 Bcf, confirming that demand continues to stay elevated. After all, the winter season has already set in the US and is likely to last for at least a month and production is also dampened by freezing temperatures in Texas.

In addition, China’s total natural gas imports surged 19.9% year-over-year to signal that the Asian nation might still be struggling with its own production. This could keep a lid on global supplies, especially with purchases of heating commodities surging during these cooler months.

However, the commodity price still took a hit as risk-off flows were in play during the latest trading sessions. Concerns about the Fed’s tightening plans, along with weak economic and earnings data, are being pinned for the drop in risk-taking.

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