On Tuesday, the natural gas futures found a strong reversal after testing the day's low at $4.715 before testing a high at $5.393. This shows the presence of value-seeking buyers below $4.726. Natural gas futures have been trading in a range-bound manner amid growing uncertainty regarding the weather outlook. The weather could remain mixed during this week with warmer weather out west and cooler weather on the East Coast of the United States.
Currently, natural gas futures are under selling pressure due to growing bearish sentiments. But, the first withdrawal of this season could take place on the announcement of the upcoming weekly inventory on Thursday amid growing inventory hopes. If this weekly inventory announcement shows a two-digit withdrawal, that may result in a breakout move above $5.868. But on the other hand, a two-digit weekly injection could attract bears, pushing the natural gas prices to break support at $4.726.
A sharp downward move will provide an opportunity to go long above the level of $4.444, as the reversal could be equally strong from this level. Undoubtedly, the weekly closing level will provide a definite direction to natural gas futures. Secondly, the rollover of December contracts on Nov. 21 will decide the directional move of the natural gas futures during the upcoming week.
Natural gas futures could continue to trade in a range of $4.7 to $5.7 till this week's closing. But growing volatility could compel the natural gas futures to test $6.2 on the higher side and $4.2 on the lower side due to any sudden tilt in weather forecast till this weekly closing.
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.