Natural Gas (NATGAS/USD) Price Technical Analysis for Sept. 28, 2020

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Natural gas has formed lower highs below a descending trend line, and price is currently testing this resistance level. A continuation of the slide could reach the next downside targets marked by the Fibonacci extension tool.

The 38.2% level is just slightly below the $2.000 major psychological barrier while the 50% level is at $1.908. Stronger bearish pressure could take it down to the 61.8% level at $1.840 or the 76.4% level at $1.755. The full extension is at $1.619.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to gain traction from here. The 100 SMA also lines up with the trend line resistance to add to its strength as a ceiling.

Stochastic is turning lower from the overbought zone to show a return in bearish momentum, and the oscillator has plenty of room to move south before reflecting exhaustion among sellers. RSI is also turning lower and price could follow suit as sellers take control.

Natural gas is on a bit more solid footing lately as traders are pricing in stronger demand on account of cooling temperatures. Milder weather conditions have been observed in several parts of the US and forecasters predict that even lower temperatures are in the cards for the next few days.

The inventory data from the Department of Energy could paint a clearer picture of supply and demand conditions, especially since weather disturbances have disrupted production along the Gulf of Mexico.

Another large draw in stockpiles could mean more upside for the commodity as it would reflect restricted supply ahead of potentially stronger purchases. A build, on the other hand, could mean that producers ramped up output to make up for lost production earlier on and to anticipate a jump in demand soon.

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