Natural Gas: Bears Look Indecisive At 200 DMA

Natural gas futures rebounded slightly on Friday from the day’s low at $4.067, before closing the day, testing a high at $4.283. This fluctuation resulted in the formation of an Exhaustive Candle on Friday that indicates the continuity of selling pressure in natural gas during the upcoming week. The weather could remain much warmer throughout the entire United States for the next two weeks, which should put downward pressure on natural gas demand.

ISM Services followed the better than expected ISM Manufacturing and hit an all-time high for the series at 69.1 in November, up from 66.7 in October. Beating the 65.0 consensus forecast indicates a sudden spurt in industrial demand for natural gas during the upcoming week.

Volatility could remain extremely high during the upcoming week. We should not forget that we are just at the edge of the winter season that could witness a sudden shift in weather outlook. Undoubtedly, a sudden change in weather during the upcoming week could result in a sharp reversal from the 200 Days Moving Average support below.

A short-covering rally could propel this bullish move on the first sign of any reversal above $4.2. On the lower side, natural gas futures could test strong support at $3.888 before a robust pull back from the oversold territory in a winter season.

Finally, natural gas futures could cover a $1 move during the upcoming week. The last weekly inventory was quite supportive for bulls to remain in command, and the value-seeking buyers are sitting at $3.726.


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