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Natural gas prices continue stabilizing, but wedge breakout struggles to materialize

Natural gas prices continue stabilizing above February lows; downside momentum is fading, hinting at a turn higher ahead but a Falling Wedge breakout has struggled to materialize.

Source: Bloomberg

Fading moment at support

Natural gas prices continue to mark time with the heating commodity stabilizing around key support. That would be the February low at 1.967. Meanwhile, positive RSI divergence continues to brew. This is a sign of fading downside momentum, which can at times precede a turn higher. Meanwhile, the 50-day Simple Moving Average (SMA) is closing in from above.

This line could reinstate the downside focus, holding as key resistance. Extending lower would open the door to downtrend resumption, exposing the 23.6% Fibonacci extension level at 1.696 towards the 2020 bottom at 1.44.

Otherwise, pushing above the moving average would open the door to a near-term upside bias, placing the focus on the March high at 3.027.

Natural gas daily chart

Source: TradingView

Wedge breakout struggling

Last week, natural gas broke above a bullish Falling Wedge chart formation when looking at the four-hour setting. That opened the door to a bullish reversal at the same time positive RSI divergence was brewing. Yet, so far such an outcome has not materialized. The 78.6% Fibonacci retracement level at 2.195 has been holding as key resistance.

That is undermining the bullish implications of the wedge. Clearing under 1.968 would overturn the wedge, opening the door to extend lower. On the flip side, pushing past resistance places the focus on the 100-period SMA. This could reinstate the downside bias. Otherwise, key levels to watch in the near term include the 61.8% and 38.2% points at 2.373 and 2.622, respectively.

Natural gas 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 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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