The current price pattern of the natural gas futures formed a strong base after Jan. 15, from the same levels where the natural gas futures found a strong base in 2014 when the natural gas futures witnessed peaks due to short-squeezing. A short squeeze on Jan. 27 on the rollover of the February 2022 contract tested a high at $7.4, whereas the March 2022 contract tested a high at $4.898 on Jan. 28, 2022.
In the weekly chart below, natural gas prices started to move upward during the third and fourth week of January 2014.
Despite high volatility, this upward journey continued during the first two weeks of February 2014, and the natural gas futures tested the high at $5.410. During the second week of February 2014, the natural gas futures started to move more upward from the level of $5.257, where we have seen the closing on Feb. 2, 2022, after testing the day’s high at $5.489, which ensures a breakout is possible to test the next target at 6.410 soon.
Frigid weather conditions in the northern and central US look quite supportive for the bulls to remain aggressive this week. As a frigid Arctic blast is on track may continue to be with more snow and ice into Texas, and the South could surge the natural gas prices on the higher side.
Secondly, suppose today’s inventory announcement finds a withdrawal, more than the expectations for 216 Bcf. In that case, a steep upward move above $5.512 could result in short-squeezing that may push natural gas to test the next psychological resistance at $6.
On the lower side, $4.176 could continue to provide strong buying support above 200 Days Moving Average. Only a breakdown below the 200 DMA could provide some space for the bears. The rest of February and the first week of March could keep the bears under fear. No doubt the bears could try to enter above $6 but, that could be more punishing if the natural gas futures find a sustainable move above $6.526.
Technically speaking, the natural gas futures look ready to bounce on every downward move till the price holds above 200 DMA as the daily chart defines the whole scenario in favor of the natural gas bulls. The technical formations tell a lot about the upcoming bumpy moves by the natural gas futures soon.
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.