Natural gas is still on a tear, making its way up to the longer-term range resistance around $3.100. Technical indicators are giving mixed signals on whether the climb could carry on or not.
The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that more gains are in the cards. Price is also trading above both moving averages, as additional indication of bullish momentum.
However, the gap between the indicators is narrowing to reflect weakening bullish momentum and a potential bearish crossover later on.
Stochastic is reflecting overbought conditions or exhaustion among buyers, and turning lower would mean that sellers are taking over. This could take natural gas down to the support areas marked by the moving averages’ dynamic inflection points or the range bottom.
RSI has some room to climb, so buyers could stay in control. The oscillator is nearing the overbought area, though, so bulls could also use a break soon.
Natural gas appears to be finding support from seasonal factors, as the start of spring and warmer weather conditions are boosting demand for cooling commodities. The upcoming inventory report from the Department of Energy could shed more insight on supply and demand conditions.
A draw in stockpiles would confirm that purchases are starting to pick up or that supply remains limited. On the other hand, a large build could signal that demand remains feeble or that supply is elevated.
In addition, central bank decisions and top-tier market releases might impact overall market sentiment and commodity price action. An optimistic outlook backed by upbeat data could be enough to assure investors that the global economy is improving and that demand for commodities could stay supported.
On the other hand, cautious remarks and downside surprises in reports could mean some losses for natural gas.