Since I wrote my Feb. 25 piece, natural gas futures didn’t look back as the bears have been left in fear after an expected recovery from the lows of $2.174 on Feb. 22, 2023.
Undoubtedly, the natural gas futures have continued their upward trend without any major pullbacks. The strong momentum that remains intact, despite increasing selling pressure, could receive further confirmation today.
The commodity showed this reversal without testing the immediate psychological support at $2, surprising many traders who were expecting a breakdown below this level. This could be the initial signal for a shift in bullish sentiments, which could push the natural gas futures above the next psychological resistance at $3 shortly.
According to natgasweather.com, the natural gas markets will be closely monitoring the supply/demand balance to see if it tightens further, despite the announcement of a weekly withdrawal of only 81 Bcf, which is smaller than the 5-year average of -134 Bcf.
However, natgasweather.com has predicted a strong storm will track across the Great Lakes and East over the next few days, bringing rain, snow, and colder temperatures that could result in a colder weather pattern late next week.
From a technical standpoint, in the 1-hour chart above, the natural gas futures are showing sufficient strength on Friday despite the announcement of an inventory that was not so encouraging on Thursday. This ensures a breakout above $3 before the weekly close or at the opening of the next week.
The continuation of this uptrend will receive its first confirmation after a sustainable move above $3.059 on the first trading session of the upcoming week, amid increasing volatility due to any change in the weather outlook during the weekend.
Natural gas futures have formed a bullish hammer in a monthly chart for Feb. 2023 and could receive the next confirmation candle in Mar. 2023. The movements of natural gas futures during the first three trading sessions of March show sufficient evidence for a reversal to continue this month once the price breaks above $3.548.
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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.