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.
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.
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.
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.
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.