Natural Gas (NATGAS/USD) Price Technical Analysis for July 11, 2019

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Natural gas might be due to resume its slide as it tests the descending trend line on the 4-hour time frame. Price could head back to the Fibonacci extension levels shown below.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. Then again, the gap between the indicators has narrowed to signal that selling pressure is weakening and that a bullish crossover might follow.

RSI is turning lower after recently reaching the overbought zone to indicate that bears might take over while buyers take a break. Stochastic is also turning down to show that bearish pressure is picking up.

With that, natural gas could slide back to the support around the 38.2% level around $2.300 or the 50% level at the area of interest around $2.228. The swing low is located at 61.8% level around $2.164. Sustained selling pressure could take it down to the 78.6% level at $2.074 or the full extension at $1.958.

Another build in natural gas storage is expected, with the consensus at 71 Bcf versus the earlier 89 Bcf build. A lower than expected increase could still lead to some upside for the commodity as it might indicate that demand has been supported even with warmer weather conditions setting in. It could also be indicative of appropriate adjustments in production among suppliers.

At the same time, traders might be waiting for clues from the FOMC minutes and speech by Fed head Powell. Recall that weak May NFP data spurred expectations of an interest rate cut before the end of the year, which was a shift from the earlier expectation of no changes throughout. Still, the June figure turned out stronger than expected, so risk sentiment might still shift if the Fed is less dovish.

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