Natural Gas Price Fundamental Daily Forecast – Bullish Traders Waiting for the Weather to Turn Colder Again

Natural gas prices are trading slightly better early Tuesday. Technical factors are contributing to the developing upside momentum. On Monday, sellers tried to drive the market through a key 50% level on the chart, but the inability to take out this level drew the attention of buyers, triggering a short-covering rally.

The rally continued into Tuesday’s session, with the futures contract opening stronger. Buyers then came in throughout the session to drive the market back through a Fibonacci or 61.8% retracement level at $2.989.

At 0929 GMT, March Natural Gas futures are trading $2.993, up $0.062 or +2.12%.

Forecast

The sideways price action since the release of the latest U.S. Energy Information Administration’s storage report suggests traders are looking for an average to below average number in this week’s report.

Traders are also likely reacting to the short-term weather forecasts calling for the return of mild temperatures.

The key area controlling the price action is the 50% level at $2.902 and the 61.8% level at $2.989. Yesterday, the market successfully tested the lower end of the range. Early today, it is testing the upper end.

In other news, there is a weather model predicting the return of a polar vortex in February. This could be bullish for prices,

The trend is up according to the daily swing chart. A trade through $3.070 will signal a resumption of the uptrend.

On the downside, slightly under the major 50% level at $2.902 is the short-term retracement zone at $2.882 to $2.837.

All we can say at this point is that the longer the market remains inside a tight range, the greater the volatility once the breakout starts.