Natural Gas Technical Report for February 28, 2017

Natural gas prices continued to trade on the defensive, as warmer than normal weather is forecast to cover most of the United States over the next 8-14 days.  The National Oceanic Atmospheric Administration forecast warm weather which should lower heating demand and natural gas demand.  Prices tumbled on Wednesday last week, dropping more than 9.5%, and is now consolidating generating a bear flag pattern. This is a continuation pattern which is a pause that refreshes. As the bears line up when prices rise.

Natural Gas is Oversold

Prices sliced through trend line support which is now seen as resistance near 2.86, which coincides with the 10-day moving average. Support is seen near 2.65, and then the February 2016 lows at 2.35.  Momentum remains negative as the MACD (moving average convergence divergence) index prints in the red with a downward sloping trajectory which points to lower prices. The RSI (relative strength index) is printing a reading of 30, which is on the oversold trigger level and could foreshadow a correction.