Natural Gas Price Prediction – Prices Edge Higher but Fail at Resistance

Natural gas prices rebounded nearly a percent on Tuesday, and is hovering near the bottom end of the recent range. Prices have tumbled on the coming warmer weather that is expected to reduce natural gas inventory draws.  Last week the Energy Information Administration reported a 237 Bcf draw which was in line with expectations and kept natural gas inventories at the lower end of the range for this time of year. Expectations are for a decline of 114 Bcf according to Estimize. The high to low range is from 90 Bcf to 178 Bcf.  Prices are currently buoyed by a colder than normal weather forecast. According to the National Oceanic Atmospheric Administration, the weather over the west and mid-west are expected to be much colder than normal while the east coast is expected to see normal temperatures. The only warm stop in the United States is expected to be Florida.

Technical Analysis

Natural gas prices edged higher but were unable to recapture resistance near the 10-day moving average at 2.68.  Support is seen near the February lows at 2.55. A break below this level and the 2.50 level could lead to a test of the 2016 lows at 1.55. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 18, below the oversold trigger level of 20 which could foreshadow a correction. Medium term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occur as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram has crossed above the MACD zero index level which is also a crossover buy signal.