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Natural gas price outlook: Bearish death cross signals trouble ahead

Natural gas prices have shown steady performance this year, but a bearish death cross on the horizon raises concerns for the future.

Source: Bloomberg

Lackluster progress and key resistance

Natural gas prices have been in a consistent range-bound price action since February. In June, prices confirmed a breakout above the long-term falling trendline from August. That opened the door to a broader upside technical bias. Since then, bullish progress has been somewhat lackluster. Key resistance remains at the March high of 3.027.

Confirming a push higher above this price opens the door to pushing upward, exposing the 23.6% Fibonacci retracement level at 3.297 followed by the 38.2% point at 4.12. Otherwise, turning lower from here places the focus on the current 2023 low around 1.97. This is critical support that if remains in play, opens the door to resuming consolidation.

Let us zoom in on the four-hour chart to see if we can get a better idea of what may be in store for the heating commodity in the week ahead.

Range-bound price action daily chart

Source: TradingView

Zooming in on the four-hour chart to reveal technical developments

The four-hour chart reveals a couple of critical technical developments. The first is that the recent near-term turn lower was preceded by negative RSI divergence. That is a classic signal of fading upside momentum. Now, it appears that the 50- and 100-period Simple Moving Averages may crossover ahead. That would create a bearish Death Cross.

Such an outcome would offer an increasingly bearish technical bias for the week ahead. Immediate support is the midpoint of the Fibonacci retracement level in the chart below at 2.507. Further losses would expose the 61.8% point at 2.419. Just beyond that is a near-term rising trendline from the middle of April that has been maintaining a cautious upside short-term technical bias.

In the event of a turn higher, clearing the June high of 2.878 opens the door to revisiting the March peak mentioned in the daily chart analysis at 3.027.

Four-hour chart

Source: TradingView

This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. See full non-independent research disclaimer and quarterly summary.

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa 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. See full non-independent research disclaimer and quarterly summary.

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