Natural gas is trending higher on its hourly time frame, finding support at a rising trend line that’s been holding since the start of the month. Price looks ready for another dip to the support area, as it stalls around the $7.500 resistance.
The Fibonacci retracement tool shows that the 61.8% level is close to this trend line and area of interest around $6.325. A shallow correction could find buyers at the 38.2% Fib or the 50% level that coincides with the 100 SMA dynamic support. A larger pullback could reach the $6.000 major psychological mark near the 200 SMA.
On the subject of moving averages, the 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support levels are more likely to hold than to break. In that case, natural gas could soon make its way back up to the swing high or higher.
Stochastic is on the move down to show that selling pressure is present, but the oscillator is already dipping into the oversold region to signal exhaustion. Turning higher would mean that buyers are returning and could allow the uptrend to resume.
RSI has more room to head lower before indicating oversold conditions, so selling pressure could stay in play for much longer.
Natural gas is enjoying strong support from rising demand for heating commodities, as well as limited supply levels due to resurfacing geopolitical tensions.
Earlier in the week, Russia threatened to cut off the last of its natural gas supply to the European region, which might keep prices elevated throughout the winter season.
However, the commodity returned some of its recent gains when the Department of Energy reported a smaller draw of 80 Bcf compared to the projected reduction of 86 Bcf. Still, this was an improvement over the earlier build of 64 Bcf.