Basically, it’s going to be cold until the week-end. This isn’t enough to sustain a strong rally. However, the market may be ripe for a short-covering rally.
Natural gas futures are trading slightly higher early Tuesday. The market is trading inside Monday’s range which suggests investor indecision and impending volatility. Yesterday, the market pierced a potential support zone, giving it a downside bias. However, the trend will remain up as long as $2.693 holds as support. Traders continue to monitor the 8 to 14 day forecast.
At 0830 GMT, March Natural Gas futures are trading $2.774, up $0.027 or +1.02%.
NatGasWeather.com, has updated its forecast for February 5 to February 11. “Two weather systems will sweep across the North and East this week with the first already through the Midwest and approaching the East. A second system will follow mid-week with a similar track. Lows for both of these systems will be quite chilly with 20s to -10F over the northern U.S., and 20s and 30s into the southeastern U.S. The western and south-central U.S./Texas will be mostly mild to warm this week with highs of 50s to lower 70s. A mild ridge will expand over the northern and eastern U.S. next weekend, while fresh cooling will arrive over the central U.S. Overall, national demand will be high through Friday – Saturday, then easing.”
Basically, it’s going to be cold until the week-end. This isn’t enough to sustain a strong rally. However, the market may be ripe for a short-covering rally.
A bottom could form slightly above the $2.693 main bottom, however, don’t expect a surge to the upside unless buyers can overcome $2.810. An even bigger short-covering rally could develop if buyers can overtake $2.896 to $2.909.
If $2.693 is taken out then the trend will turn down. However, it will be difficult to short weakness at that level because the next main bottom comes in at $2.532.
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.