Natural gas price action setup: is this it?
Chance of a consolidation/minor rebound in natural gas; while the broader slide appears stretched, the any rebound/upside could be capped for now and what is the outlook and what are the signposts to watch?
The sharp rebound in natural gas in recent days is a sign that bears are getting exhausted. However, it may be premature to assume that the worst is over.
Natural gas fell to a 2.5-year low last week before rebounding 35% over four sessions, raising the prospect that the fall below immediate support at the early-February low of 2.50 was a false break. Given deeply oversold conditions on higher timeframe charts, a short-term consolidation/ minor gains may have started.
The quick turnaround to crack the support-turned-resistance at 2.50 confirms that the downward pressure is beginning to fade for now. Natural gas is now testing crucial resistance at the mid-February high of 2.65. A decisive break above would confirm that the immediate bearish pressure had faded. Subsequent resistance is at the late-January high of 3.60.
Natural gas 240-minute chart
Despite how stretched the downtrend is in terms of the extent and the pace of the fall since late 2022, the jump in recent days could at best be a dead cat bounce. That is, a retest of last week’s low can’t be ruled out. That’s because the damage in recent months could take time to unwind – absent of a ‘V’-shaped rebound, it could turn out to be a prolonged base-building pattern.
However, as highlighted in the previous update, it can’t be denied that slide could be in its advanced stages, especially as natural gas last week nearly hit the strong support at the 2020 low of around 1.45, also the target of a major double-top pattern (the 2022 highs) triggered at the end of last year.
Natural gas daily chart
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
