Natural Gas Bears Hold Ground Amid Uncertainty in Demand

In my previous article, I noted the presence of extreme indecisiveness among traders on March 19th as natural gas futures continued to slide and hit a low of $2.218 on Monday.

The question is whether the bears have won the battle amid supportive conditions or are ready to run upward.

According to reports from natgasweather.com, there was strong demand on Monday due to a cold start with lows of 0s to 30s across most of the US and 20s to 30s deep into the South. However, weak national demand is expected to follow from Wednesday to Friday. A warm ridge demand is expected this weekend, and chilly weather systems over the West and Northern Plains are spread south and eastward. Overall, swings in demand and light-moderate weather are expected for the next 15 days.

Natural Gas Futures 4-Hour Chart

Looking at the 4-Hour chart, the floor testing may be over, as the bears seem reluctant to test the recent low at $2.114.

Natural Gas Futures 1-Hour Chart

However, movements in a 1-Hour chart indicate some reversal on Tuesday from the current level, with repeated selling on every upward move as the weakness will likely persist until this Thursday. The immediate resistance is at 9 DMA, which is at $2.327, followed by the 18 DMA at $2.412 and the 200 DMA at $2.510 since the formation of a bearish cross on March 17th.

The bulls could become active from Friday amid growing expectations for a swing in demand during the weekend. They may try to bounce on Tuesday and Wednesday to sustain above the 200 DMA, which could increase the quantum of wild price swings if the futures hold above Monday's low in today's trading session.

Floor testing could continue from Tuesday to Thursday, as the price-action may find some reflection of the Fed's action in its meeting on March 22nd. The wobbling US dollar could provide some jerks to commodity prices, especially energy.

Disclaimer: The author of this analysis does not have any position in Natural Gas futures. Readers are advised to take any position at their own risk, as Natural Gas is one of the most liquid commodities in the world.