Natural gas bulls are at the bay before a breakout move, as 2021 concludes. $4.040 provided a stiff resistance for a long time since the noises over warm winters echoed at the beginning of December 2021.
Natural gas bulls attempted to cross the resistance at $4.040 and tested a high at $4.075 before shedding some gains. The natural gas futures are currently at $3.973 after testing day’s low at $3.886. This move attracted focus towards a bullish crossover formation in the daily chart that is nearing completion and could result in a short-covering rally.
The shifting weather looks evident enough for unfolding the new ways for natural gas bulls. Growing voices about the warm winters could diminish with El Nino's limited impact on weather that was supposed to delay the winters and affect the seasonal demand for natural gas. It’s unlikely that the winters could remain silent.
On the other hand, increasing Omicron infections look evident enough to force the majority to stay indoors. This entire situation could result in higher demand for natural gas. The 200 DMA has been providing a tough resistance in a daily chart, but the natural gas bulls look too reluctant to sustain above this for a long time till the end of 2021.
The current move by natural gas futures could turn the 200 DMA into support for this winter season before heading more upward. I find that a sustainable move above $4.888 could encourage bulls to move towards a new peak of this season.
To conclude, the further upward move could be full of anxiety for the bulls due to growing challenges by the bears, as they are still busy selling on every step. But, the bulls look too confident to command despite increasing volatility.
This could push the natural gas futures towards a sustainable move above $4.888 before or after this weekly inventory will be the first confirmation of the current uptrend.
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 in the world.