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James Hyerczyk

Natural gas futures are soaring again on Wednesday as the short-squeeze continues. Short sellers are scrambling to cover positions after a major shift in momentum was fueled by Monday’s start of a crude oil price war between Saudi Arabia and Russia. Traders feel that the price war will drive down U.S. oil production which will have a direct effect on natural gas supply.

At 14:56 GMT, May Natural Gas is trading $2.036, up 0.051 or +2.57%.

Daily May Natural Gas

Daily Technical Analysis

The main trend is up according to the daily swing chart. The main trend changed to up on a trade through 1.884 on Tuesday. The new main bottom is Monday’s low at $1.657.

The short-term range is $2.060 to $1.657. Its retracement zone at $1.906 to $1.859 is new support.

The main range is $2.229 to $1.657. Its retracement zone at $1.943 to $2.010 is controlling the near-term direction of the market. Breaking out over this zone will put the market in a bullish position.

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Daily Technical Forecast

Based on the early price action and the current price at $2.036, the direction of the May Natural Gas futures contract the rest of the session on Wednesday will be determined by trader reaction to $2.010.

Bullish Scenario

A sustained move over $2.010 will indicate the presence of buyers. The first target is the main top at $2.060. Taking out this level could trigger an acceleration to the upside with $2.229 the next major upside target.

Bearish Scenario

A sustained move under $2.010 will signal the presence of sellers. The next downside targets are layered at $1.943, $1.906 and $1.859. Since the main trend is up, buyers are likely to come in on a pullback into these levels.

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