Natural Gas Futures—Natural gas futures in the March contract is trading lower for the 2nd consecutive session down another 5 points at 2.48 as the trend remains extremely choppy.
I will be looking at a possible counter-trend trade as I do think the downside is limited as the low which was hit on December 28th at 2.26 looks like a spike bottom as this market went straight up and now straight down and it looks to me that it might be forming a head and shoulders bottom pattern which is a technical indicator for higher prices ahead.
Gas prices are still trading below their 20 and 100 day moving average as the trend remains mixed while fundamentally speaking the Weather Company said the central and southern U.S. states are poised for above-normal temperatures over the next couple of weeks, which would curb heating demand for nat-gas. Also, the Weather Company said that models show that well-above-normal temperatures are expected in the central U.S. from Jan 29-Feb 2 reducing expectations that a polar vortex in the Arctic will drop down into the U.S. later this month.
Historically speaking prices remain depressed as this commodity has not been able to join the energy rally that we witnessed over the last 3 months, however over the course of time I think this market is headed higher.
CHART STRUCTURE: IMPROVING
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