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Natural Gas Price Fundamental Daily Forecast – Could Pullback into $3.151 to $3.111 Before Moving Higher

By:
James Hyerczyk
Published: Nov 13, 2017, 07:55 UTC

Natural gas futures are trading lower early Monday as investors began to take profits on forecasts for average to above average temperatures into November

Natural Gas

Natural gas futures are trading lower early Monday as investors began to take profits on forecasts for average to above average temperatures into November 23.

At 0631 GMT, January Natural Gas futures are trading $3.267, down $0.039 or -1.18%.

Prices surged last week on forecasts for extremely cold weather. Now investors are reacting to a forecast of a break in the extremely cold temperatures that gripped key demand areas over the week-end.

According to natgasweather.com for the period November 13 to November 19, “Mild weather systems will track across the East the next few days with mostly rain showers, but with warming temperatures compared to this weekend.

The central and southern U.S. will also warm with highs reaching the comfortable upper 60s to 80s.

The Northwest into California will see weather systems with valley rain and mountain snow, but mild to warm over the rest of the West.

A strong weather system with subfreezing temperatures will track across the Midwest and NE late this week and next weekend for another round of stronger demand, which could lead to moderate to high demand.”

Natural Gas
Daily January Natural Gas

Forecast

The lack of clarity regarding the weather may encourage investors to trim long positions over the next few days. Some services are calling for the return of cold weather, others are calling for average temperatures.

I’m not too worried about the weather, however, because the chart pattern looks bullish. Traders are going to have to decide whether to buy strength over $3.318 and $3.350 or wait for a pullback into $3.151 to $3.111.

Based on the size and duration of the current rally from the November 1 bottom at $2.983, it looks as if seasonal traders have put in the bottom. This is essentially a bet on the return of cold weather.

The price action also suggests that sentiment may have been a little too gloomy at the end of October, causing investors to reassess their outlook for the market. For example, prices for January, at the height of the winter heating season, now command a premium of almost 32 cents over April, up from just 16 cents at the start of the month.

Next we’ll be looking for signs that hedge fund and commodity fund managers have returned to the long side of the market after drastically cutting long positions from September to October.

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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