Natural Gas News: Futures Stabilize Above 50-Day MA with $3.494 Next

Struggles to Sustain Rally but Still Above 50-Day MA

Despite closing above the 50-day moving average at $3.102 for two-straight sessions, April natural gas futures struggled to sustain an early rally to $3.317 before closing lower for the session. Nonetheless, it did finish for a third session above this indicator, perhaps an indication that buyers were defending the moving average.

On Friday, April Natural Gas futures settled at $3.699, up $0.093 or +2.58%.

50-Day MA Is the Key Near-Term Level

We’re going to be watching the near-term reaction to the 50-day MA since holding it gives the market the best chance for a rally into the 200-day moving average at $3.497, which is our major upside target and a possible trigger point for an acceleration to the upside.

Uptrend Intact According to Swing Chart

Swing chart analysis shows that the market is in an uptrend due to the series of higher tops and higher bottoms. The bottom at $2.775 is important because it is a secondary higher bottom, serving as proof that new buyers came in on February 26 when it was tested. A trade through the March 9 top at $3.494 will reaffirm the uptrend.

$3.345 Pivot Is the Level to Watch

The main range is $2.604 to $4.085. Its 50% level or pivot at $3.345 is another gauge of the market’s strength. A sustained move over this pivot could push the market into the resistance zone at $3.430 to $3.585. This area stopped the rally at $3.494 on Monday. A sustained move under the major pivot will indicate the presence of sellers. This generated the downside pressure needed to test another short-term retracement zone at $3.135 to $3.050.

Support and Resistance

Putting it all together, it looks like support is clustered around the $3.135 to $3.050 retracement zone with the 50-day moving average sitting inside it. Resistance is a combination of the short-term retracement zone at $3.430 to $3.585, and the 200-day moving average at $3.497.

Sitting between the support and resistance is the intermediate 50% level at $3.345, making it the key level to watch for direction. Look for an upside bias to develop on a sustained move over the 50% level, and for further weakness under it.

Waiting for a Catalyst

My experience tells me that this type of price action typically indicates investor indecision and impending volatility. It also indicates the trade is balanced with traders waiting for a catalyst to drive the next major move.

It also represents conflicting fundamental signals. What we’re seeing is strong geopolitical risk and surging global LNG prices versus bearish U.S. fundamentals such as high production and milder weather forecasts.

More Information in our Economic Calendar.