Thursday, the bears were able to push natural gas below $7, but on Friday, we witnessed the return of the bulls, bringing back NG once again above the psychological resistance level at $7. Undoubtedly, this price action reflects upcoming bumpy moves.
The technical formation we saw on Friday indicated a short-covering rally before the weekly closing, as the chilly late-season weather systems with showers and thunderstorms will continue to cross the northern US through the weekend.
On the daily chart, a reversal from the day’s low at $6.806 resulted in the formation of a bullish candle. This daily candle made it clear that a weekly closing above $7.767 was possible as the bulls looked too aggressive after 07:00 am and could have started a breakout move.
This daily candle could find a sustainable move above 9 DMA, which is currently at $7.142.
The hourly chart shows the formation of a ‘Bullish Crossover’ was going to complete soon, resulting in a short-covering rally as the hourly candles were sustaining above 200 DMA.
The15-minute chart shows a breakout above 200 DMA was possible as the formation of ‘Bullish Crossover’ looked evident enough for a bumpy move within a few minutes.
Fundamentally, the odds created by Russia for the sanction-imposing countries to pay in rubles could continue to keep the natural gas bulls aggressive during the upcoming weeks.
Russia cut gas supplies to Bulgaria and Poland on Wednesday after they refused to abide by the demand issued in a Russian presidential decree last month for gas payments in rubles, prompting concerns other countries could be the next hit.
Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are advised to take any position at their own risk; as Natural Gas is one of the most liquid commodities of the world.