Are Natural Gas Futures Set for a Bullish Reversal?
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<p>Natural gas futures (June delivery) have been range bound over the past two months, consolidating the downtrend from August’s highs near the 2.00 round level.</p>
<p>The sideways move is developing within a descending triangle and at the bottom of a downtrend, which is technically an ideal setup for a bullish trend reversal. Meanwhile, the RSI and the MACD have been making higher lows during the same period, reflecting fading selling forces too.</p>
<p>Still, buyers may remain patient until the price successfully exits the triangle on the upside through the 2.42 level. The 50-day simple moving average (SMA) is currently flattening in the same region, while slightly lower, the 20-day SMA is adding a strong footing under the price. Should the price find enough support to run above the triangle, the spotlight will immediately turn to the previous high of 3.14, a break of which is needed to confirm an actual bullish trend reversal. Another successful battle here may produce a new leg up to 3.50, while a faster increase could target the 4.00 psychological mark.</p>
<p>In the bearish scenario, where the sell-off worsens below the triangle and the 2.00 number, the price may depreciate towards the 2016 and 2020 floor of 1.60-1.50. Even lower, the bears would aim for the crucial 1.00 level.</p>
<p>In brief, natural gas futures seem to be trading within a bullish formation that may provide a foundation for a bullish trend reversal. A break above 2.42 could boost buying appetite, though only a decisive extension above 3.14 would mark a new higher high in the short-term picture.</p>
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