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June Natural Gas Looking to Extend Explosive Rally on Breakout Over $9.010

By:
James Hyerczyk
Published: May 6, 2022, 07:35 UTC

Trader reaction to $8.783 will determine the direction of the June natural gas market on Friday.

Natural Gas

In this article:

Natural gas futures are trading flat early Friday with the nearby futures contract hovering just under a more than eight year high. One catalyst behind the current surge is waning U.S. production growth at the same time many countries are looking for new suppliers to help break their dependence on Russian gas after Moscow’s invasion of Ukraine.

At 07:08 GMT, June natural gas futures are trading $8.793, up $0.010 or +0.11%. On Thursday, the United States Natural Gas Fund ETF (UNG) is at $30.08, up $1.07 or +3.69%.

The United States is already the world’s largest producer of natural gas. But the two mainstays of production – the Appalachian region and West Texas – are seeing growth slow, with companies blaming lack of adequate pipeline infrastructure, despite prices near 14-year highs, according to Reuters.

Since Moscow invaded Ukraine on February 24, U.S. gas prices have soared about 50% as European countries look to the United States, the world’s second biggest exporter, to sell more liquefied natural gas (LNG) to wean Europe off Russian fuel, Reuters said.

Daily June Natural Gas

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. Taking out yesterday’s high at $8.913 will signal a resumption of the uptrend. A move through the November 10, 2014 main top will reaffirm the uptrend. A trade through $6.805 will change the main trend to down.

The minor range is $6.805 to $8.913. Its 50% level at $7.859 is the nearest 50% level and potential support.

Daily Swing Chart Technical Forecast

Trader reaction to $8.783 will determine the direction of the June natural gas market on Friday.

Bullish Scenario

A sustained move over $8.783 will indicate the presence of buyers. This could trigger a surge into the main top at $9.010. This level is a potential trigger point for an acceleration into the June 16, 2014 main top at $9.551.

Bearish Scenario

A sustained move under $8.783 will signal the presence of sellers. If this move creates enough downside momentum over the short-term, we could see a test of the first pivot at $7.859. Since the main trend is up, buyers are likely to come in on a test of this level. Aggressive traders have been buying dips for months and I don’t see them letting up since the fundamentals are skewed to the bullish side.

Side Notes

Taking out $8.913 then closing lower for the session will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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