Natural gas is starting to trend higher as it forms higher lows and higher highs inside an ascending trend channel on the 1-hour time frame. Price is bouncing off support and could be due for a test of resistance at 3.120 from here.
The 100 SMA is below the longer-term 200 SMA for now to indicate that the path of least resistance is to the downside. In other words, there’s still a chance for a downtrend to take place. Then again, the gap between the moving averages has narrowed significantly to signal weakening selling pressure. If a bullish crossover follows, buyers could have more energy to take prices higher, possibly even past the channel top.
RSI is on the move up so price might follow suit while buyers have the upper hand. Stochastic is also treading higher to signal the presence of bullish momentum that could take natural gas price beyond the mid-channel area of interest.
A bit of risk-taking is seen in the financial markets as the FOMC signaled that they could slow their pace of tightening this year. This could keep a lid on borrowing costs, which might then be more encouraging for business investment and energy demand.
At the same time, optimism that the US and China could hash out their differences in upcoming trade talks is also keeping commodities like natural gas afloat. For now, though, traders might hold out from placing any large bets until the meetings conclude. After all, escalating tensions even with the 90-day tariffs truce could bring risk-off flows back in financial markets.
Earlier on the EIA reported a decline in natural gas of 91 billion cubic feet for the week, which signals that oversupply isn’t a concern. Sustained demand, particularly during these seasonal colder months, could also contribute to price gains.