After finding a base at the upper end of the ‘Ichimoku Clouds,’ natural gas finally took a long breather as the last attempt to hit 26 DMA seems to be the last bullish move of this season.
Undoubtedly, Russia used energy supply as a tool to lessen the impact of Western sanctions just at the cost of self-destructive measures by selling natural gas and crude oil at a heavy discount to China and some Asian countries and stopping the total supply to European countries.
The EU plan did not include an earlier idea to cap Russian gas prices after Russia warned it could cut off all fuel supplies if one were introduced.
The Commission said it was still looking into a Russian gas price cap and discussing the idea of broader gas price caps, which have also divided member states, and were not included in Wednesday's proposals.
On the other hand, major weather features to impact the US in the next 15-days held in the overnight data with the light national demand for another 4-days as weather systems track across the country with widespread comfortable highs of the mid-60s to lower 80s besides hotter 90s over Texas, S. Plains, and Southwest deserts.
The overnight data maintained unseasonably strong upper high pressure expanding to rule much of the US next week, Sept 18-22, resulting in widespread above normal temperatures for a modest increase in demand.
On Wednesday, the natural gas futures tried to sustain above $8.846, an immediate resistance in a daily chart as the next resistance is at 26 DMA, which could lead to the next selling spree if the natural gas bulls try to cross the immediate resistance.
On Thursday, the upcoming weekly inventory could show a large build-up than the expected levels that could be a pinpoint to trigger the next sell-off as the geo-political moves turn to favor the natural gas bears, who look ready for a $2 downward move from the current levels as the Futures could find an absence of buyers above 26 DMA.
Finally, I conclude that a sustainable move by the natural gas futures below the 9 DMA, currently at $8.495, will confirm the advent of the next breakdown that could push the Futures up to $6.444 before this monthly closing.
Disclaimer: The author of this analysis does not have any position in Natural Gas and WTI Crude Oil 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.
Remember, YOU push the buy button and the sell button. Investors are always reminded that before making any investment, you should do your own proper due diligence on any name directly or indirectly mentioned in this article. Investors should also consider seeking advice from an investment and/or tax professional before making any investment decisions. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.