Natural gas seems to have completed its pullback to the broken descending trend line on its 4-hour time frame. Price could be setting its sights on the next upside targets marked by the Fib extension tool from here.
The 38.2% extension is at the $2.459 level then the 50% level is at $2.538. Stronger bullish momentum could take it up to the 61.8% level at $2.612 or the 78.6% extension close to the swing high. The full extension is at $2.873.
The 100 SMA has crossed below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. The 100 SMA is currently holding as dynamic resistance for now.
RSI is already on the move down without hitting the overbought zone, indicating that sellers are eager to return. Stochastic is also on the move down but is nearing the oversold region to signal exhaustion among sellers. Turning back up could confirm that buyers are back in the game.
Natural gas is still on weak footing despite cooling weather conditions in some parts of the US. Production remains elevated, although there are three weather conditions that the NOAA is watching but these are not expected to hit any areas that could cause a natural gas supply disruption.
Weather forecasters predict milder temperatures in the days ahead, which could mean stronger demand for heating commodities like natural gas. Still, overall market sentiment is keeping a lid on gains as traders are on edge with trade talks between the US and China going on.
The EIA reported that US LNG exports decreased week over week, with eleven LNG vessels with a combined LNG-carrying capacity of 40 Bcf departing the United States between September 26 and October 2.