Natural gas recently broke above the top of its range visible on the daily time frame, so more gains might be in the cards. Price has yet to test the latest highs near $3.300 to see if bullish momentum would persist.
The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that the rally could be sustained. The gap between the indicators has narrowed, though, so bullish pressure might be weakening.
Stochastic is heading higher to show that there is enough bullish momentum left, but the oscillator is also testing the overbought zone to signal exhaustion among buyers. Turning lower would confirm that sellers are returning and could take natural gas back to nearby support levels.
RSI is also heading up but already in the overbought zone, so price could follow suit once it heads south to reflect a pickup in bearish pressure. Support could be found at the $3.000 major psychological mark, the 100 SMA dynamic support at $2.800 and the 200 SMA dynamic support around $2.700.
Natural gas is drawing strong support from the pickup in demand on account of warmer weather. The higher temperatures in several parts of the US are boosting purchases of cooling commodities including natural gas.
Forecasts of even higher temperatures could continue to lift natural gas prices, as the summer season rolls in. The EIA reported a build of 98 Bcf in stockpiles, slightly lower than the expected build of 99 Bcf and in line with the previous week’s gain.
Risk-taking could continue to lift commodities, especially since traders are paring expectations of Fed tightening upon seeing the latest US CPI readings. Although the results turned out higher than consensus, the market reaction suggests that these were not high enough to boost tapering or rate hike prospects.