Natural gas (10.12.2014) respected our last article & fall to the mention target area. As always traders becoming more bearish due to last week fall in natural gas & we feel its time to have a sharp look at future prospect.
On fundamental side, the average inventory withdrawal staying on higher side since november 2014 due to harsh winter in major part of US. However some relief has been seen but how long in the winter season ?
Overall, inventory level are still down by more than 400 bcf compare to 5 year inventory while prices premium is still pending. A little push from winter may put rocket under natural gas prices. Probably we need to wait for 2-3 weeks more for that.
On charts, natural gas is trading around $3.638 & it was bouncing from multiple support trendline which is holding natural gas prices for the year 2014. Meanwhile we also witness a major shift on volume with bullish & bearish candles. Higher volume associated with bullish candle suggest the majority of trader while a positive divergence on RSI indicating for a reversal or shot covering ahead. Most probably correction towards $3.840& then $3.990 possible in coming trading session.
Mcx natural gas trading around 227 & we can see on charts, natural gas fall sharply towards 225 mark which represent the support zone as well as a very strong parallel support. Although mcx charts having a contract gap with lower range at 223 (which is almost filled now) , the yearly bottom is very close. Continue placing shooting star candles around support zone, hinting for a reversal & we may witness a sharp move towards 237 & then may be 246 in coming trading session specially if inventory hit more withdrawal than forecast (-45 bcf)
Based on above studies, we will prefer to buy natural gas for an upside rally in coming trading session.
Note – Above technical analysis is not a buy/sell recommendation. For recommendations Contact Us