Natural gas is completing its retest of the broken trend line on its 4-hour time frame before gaining traction on the uptrend reversal. The Fibonacci extension tool shows the next potential bearish targets.
The 38.2% Fib extension is just below the $7.000 barrier while the 50% level lines up with the swing low at $6.395. The 61.8% level is at $6.097, then the 76.4% level is at $5.729. The full extension is at $5.135.
Stochastic is on the move up to show that there is still some bullish pressure left, but the oscillator is closing in on the overbought region to signal exhaustion. Turning lower would mean that sellers are ready to take over.
RSI has more room to climb, though, indicating that bullish momentum remains in play. Natural gas price could keep following suit until overbought conditions are met.
The 100 SMA is also above the 200 SMA to indicate that the path of least resistance is to the upside or that there’s still a chance the uptrend could carry on. Price has climbed back above both moving averages, so these could hold as dynamic support levels moving forward.
Natural gas prices seem to be regaining their footing as Ukraine cut off one Russian natural gas pipeline that supplies European homes and industries. Ukraine’s natural gas pipeline operator said it was stopping Russian shipments through a hub controlled by Moscow-backed separatists due to interference with enemy forces.
However, this impact is said to be limited since demand for the heating commodity is starting to slow while temperatures pick up. It would take a while before summer kicks in and leads to a jump in purchases of cooling commodities, so natural gas could face some downside in the near-term.
The upcoming inventory report from the Department of Energy is slated to show a build of 82 Bcf compared to the earlier 77 Bcf increase.