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There is Good News for Natural Gas Traders

ByThe Pattern, Price & Time Report
AuthorJames Hyerczyk
Published 03/08/2012, 05:56 AM
Updated 05/14/2017, 06:45 AM
NG
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It was a good news, bad news week for natural gas futures. First the bad news. Prices continued to fall with the market reaching a new low for the year. The failure to hold the previous low at $2.411 means that the downtrend that was stalled for five weeks has now resumed.

Natural gas prices are trading at their lowest level in 10 years as a mild winter comes to a close with storage facilities left with a huge surplus of the fuel on hand. The lack of demand and a boom in production could mean lower prices to follow as the U.S. enters the warmer spring season.

Prices could drop even further over the near-term with traders eying the $2.00 per 1,000 cubic feet level. Based on normal seasonality, demand is not expected to pick up until the summer when air conditioning usage increases.

Until production declines, natural gas producers face the possibility that storage will reach 100 percent of capacity sometime between the heating and cooling seasons when demand drops significantly.
Nearby-Natural-Gas-Weekly
The preceding was the bad news. The good news can be found on the weekly chart. Although the main downtrend was reaffirmed when the market broke through the most recent swing bottom at $2.411, a new lower swing top was formed at $2.984. This is significant because this is the price level at which the main trend turns to up. The previous breakout or “change in trend” level was $4.338. So while the trend remains bearish, at least traders won’t have to sit through a $2.00 rally before the trend turns up. Besides the swing chart breakout, bottom-pickers should continue to watch for a weekly closing price reversal to signal a short-term bottom and a possible shift in sentiment.

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