Natural Gas Price Prediction – Prices Break Above Trend Line Resistance on Cold Weather Forecast
Natural gas prices broke out above trend line resistance, as a colder than normal weather pattern is now expected to cover most of the United States for the next 8-14 days. This will take us to the end of February but still provide temperatures that will require a high level of natural gas demand. The weather is expected to be colder than normal throughout the western half of the US during the next 6-10 days but warmer than normal across the east coast according to a report from NOAA.
Technical Analysis
Natural gas prices broke out above trend line resistance and is poised to test the January highs at 2.20. Support on natural gas prices is seen near the 10-day moving average at 1.85. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs 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 crossed above the zero-index line, which is also a buy signal. The MACD histogram is printing in the black with a rising trajectory which points to higher prices. The RSI (relative strength index) surged higher reflecting accelerating positive momentum. The fast stochastic also rallied after generating a crossover buy signal. The current reading on the fast stochastic is 94, well above the overbought trigger level of 80 which could foreshadow a correction.
Managed money reduced both long and short positions in futures and options according to the latest commitment of trader’s report released for the date ending February 11, 2020. According to the CFTC, hedge funds reduced long positions by 25K contracts while reducing short positions in futures and options by 10K contracts. Open interest that is short outnumbers open interest that is long in the managed money category by 3-1 which sets that market up for a short-squeeze.
This article was originally posted on FX Empire
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