Natural Gas (NATGAS/USD) Price Technical Analysis for Sept. 29, 2020

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Natural gas is in tight consolidation as seen on the 1-hour chart but might be giving a bullish signal. Price is trading inside a bullish flag and a break past the short-term resistance could be followed by a continuation of the climb.

In particular, prices could climb by the same height as the flag mast, which spans $1.800 to $2.100. The 100 SMA has just crossed above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the uptrend is more likely to pick up from here.

However, stochastic is turning lower to signal that selling pressure is returning even without seeing overbought conditions. RSI is treading sideways but also nearing the overbought zone to signal likely exhaustion among buyers. In that case, natural gas could still retrace to nearby support levels to gather more buying energy.

The upcoming inventory report from the Energy Information Agency could show a build in natural gas stockpiles as producers might have ramped up production to make up for earlier lost output on account of weather disturbances.

However, there have still been some hurricanes along the Gulf of Mexico in the past weeks that might have led to shut-ins among some refineries. In that case, supply could remain limited and spur a reduction in inventories, which might be a bullish scenario for the commodity.

Note that demand is widely expected to pick up as cooler weather conditions are observed and could stay on for the next few months, supporting purchases of heating commodities. At the same time, a pickup in risk appetite could also keep natural gas price afloat, especially if top-tier data like the NFP support the idea of a recovery in the US economy.

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