Natural gas weekly outlook: doji sees upside follow-through

Follow-through after a doji?

Natural gas prices aimed slightly higher for the second week in a row.

This followed the emergence of positive RSI divergence on the weekly chart. The latter is a sign of fading downside momentum, which can at times precede a turn higher. A Doji candlestick pattern also emerged earlier in April, further adding to the argument that the dominant downtrend since last year is running out of steam.

Last week’s upside follow-through after the Doji could open the door to extending gains, placing the focus on the 2.422 inflection zone. Beyond that sits the 20-week Simple Moving Average (SMA).

Natural gas weekly chart

Eyes on the 50-day SMA

The daily chart helps reveal the key obstacle natural gas prices face in the week ahead that could stall efforts to push higher.

That is namely the 50-day SMA, which held as key resistance last week, maintaining the dominant downside focus. This is offering a near-term neutral outlook given that prices have been unable to find directional momentum since falling back to the February low at 1.967.

Closing above the 50-day SMA could offer an increasingly bullish outlook, exposing the March high at 3.027. Otherwise, falling under support exposes the 2020 bottom at 1.44.

Natural gas daily chart

Rising wedge and 100-period SMA

The four-hour chart can give a better near-term picture of what the heating commodity could face in the week ahead.

Last week, prices confirmed a breakout under a Rising Wedge chart formation, opening the door to extending losses. But, natural gas was unable to clear under the 100-period SMA, which reinforced it as key support. Prices are idling around the ceiling of a former rectangle chart pattern at 2.238.

Clearing this resistance exposes the 61.8% Fibonacci retracement level at 2.373. Otherwise, falling under the 100-period SMA may open the door to revisiting the February low.

Natural gas four-hour chart

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