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Natural Gas Price Fundamental Daily Forecast – Move Over $3.00 Means Weather Market Has Started

By:
James Hyerczyk
Updated: Jun 18, 2018, 16:37 UTC

It comes down to the duration of the current high temperature forecast. The market is likely to handle 2 to 3 days of above average temperatures, but if the weather experts start to use terms like “lingering” or “high pressure dome” then we could see a huge breakout to the upside over $3.041.

Natural Gas

Natural gas prices are trending higher early Monday as investors react to short-term forecasts for hot weather. Nearby futures prices breached the psychological $3.00 level on Friday for the first time since January but buyers still face a mountain of hedging pressure at or near $3.041, the October 2017 top.

At 0429 GMT, August natural gas is trading $3.028, up $0.013 or +0.43%.

Natural Gas
Daily August Natural Gas

It comes down to the duration of the current high temperature forecast. The market is likely to handle 2 to 3 days of above average temperatures, but if the weather experts start to use terms like “lingering” or “high pressure dome” then we could see a huge breakout to the upside over $3.041.

At this time, it’s best to look at the monthly chart because it shows the formation of a long support base as this chart pattern is usually indicative of impending volatility.

The major range is $4.600 to $2.480. If buyers can take out $3.041 with conviction then this could create the upside momentum needed to carry August natural gas to its retracement zone at $3.540 to $3.790.

The fundamentals are stacked on the side of the bulls. We have a supply deficit and increasing demand due to the hot weather. Now the bulls have to come in with enough volume on a breakout over $3.041 to take out buy stops and any hedging pressure that shows up.

As I said earlier, everyone knows it’s hot outside and that it’s going to be hot in key demand areas for several days. NatGasWeather.com is saying that we could see strong demand until Tuesday then milder temperatures into the weekend. If they extend the forecast for hot temperatures beyond Tuesday then prices could surge to the upside. At this point, prices could continue to rise until cooler temps are put into the forecast.

Since we are in a weather market with a strong bias to the upside, watch for heightened volatility and pay attention to the forecasts because the rally could turn on a dime.

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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