Natural Gas Prices Can’t Seem to Get a Break, is There More Pain Ahead?

Natural Gas, Head & Shoulders, Hammer – Technical Outlook:

• Natural gasoline costs aiming for a sixth week of losses
• Hammer candlestick sample is in concentrate on the day by day
• Closing beneath May 2021 low resumes the downtrend

Weekly Chart – Mild Weather Continues Pointing Natural Gas Lower

Natural gasoline costs proceed to plummet, with the commodity closing beneath $3 {dollars} for the primary time since May twenty fourth, 2021. The United States and Europe stocking up inventories forward of winter and delicate climate have contributed to the +70% plunge since August. According to Bloomberg, current climate estimates within the United States have resulted in merchants betting on delicate temperatures in February.

On the weekly chart beneath, pure gasoline continues to transfer decrease in a path projected by a Bearish Head & Shoulders chart sample. January is shaping up to be a 36% drop. That could be the worst month-to-month efficiency since December 2018 because the commodity goals for a sixth consecutive week of losses. Let us take a have a look at the day by day chart to paint a higher image of the near-term value trajectory.

Chart Created Using TradingView

Daily Chart – A Hammer Emerges

On Thursday, pure gasoline closed simply above the May 2021 low. In truth, costs had been unable to maintain a shut beneath 2.832, reinforcing it as speedy help. The commodity additionally left behind a Hammer candlestick sample. A Hammer is usually seen as a signal of indecision inside downtrends. While its emergence doesn’t essentially imply that a reversal is coming, it is going to be necessary to watch what occurs after.

Upside follow-through after the Hammer may open the door to a push increased. That would place the concentrate on the 20-day Simple Moving Average (SMA). The latter could maintain as key resistance, sustaining the dominant draw back focus. Even if costs handle to pull additional forward, the broader decline is being maintained by a falling line from August.

A confirmatory draw back shut beneath the May 2021 low at 2.832 exposes the 100% Fibonacci extension stage at 2.326. Moving towards the latter opens the door to taking pictures for 2020 lows, which make for a vary between 1.44 – 1.612. Reaching this vary might be the implied trajectory of the Head & Shoulders seen on the weekly chart.

Chart Created Using TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com

To contact Daniel, comply with him on Twitter:@ddubrovskyFX