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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Natural gas: prices stuck at resistance as momentum fades, will prices turn?

Natural gas prices struggling to hold near-term momentum; a Doji candlestick pattern has emerged, showing indecision and keep an eye on the brewing Rising Wedge on the four-hour.

Source: Bloomberg

Doji candlestick in focus

Natural gas prices struggled to push higher for a third consecutive day this week. Over the past 24 hours, a Doji candlestick pattern emerged. That is a sign of indecision. While not necessarily an impending sign of a reversal, downside confirmation from here could open the door to a turn lower. Immediate support seems to be the 20-day Simple Moving Average (SMA).

A drop through the latter exposes the February low at 1.967 before the 2020 low comes into focus at 1.44. Immediate support is a combination of the 23.6% Fibonacci retracement level at 2.297 as well as the 50-day SMA. Clearing these points would open the door to extending near-term gains. But, the falling trendline from August continues to maintain the broader downside focus.

Daily chart

Source: TradingView

Fading upside momentum

Zooming in on the four-hour timeframe helps paint a better picture of how natural gas is struggling at resistance. Negative RSI divergence is emerging as prices appear to be stuttering at the midpoint of the Fibonacci retracement level at 2.782. That is a sign of fading upside momentum, which can at times precede a turn lower.

Meanwhile, prices continue to trade within the boundaries of a bearish Rising Wedge chart formation. However, the floor is immediate support. A breakout lower could open the door to resuming the near-term downtrend from late January into the end of last month. That would place the focus on the 100-period SMA. That latter could hold as support, pivoting prices higher.

Four-hour chart

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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