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Natural Gas Forecasting Based on Supply and Demand for the Week of July 23, 2018.

Large Global Energy firms are increasing their natural gas output by 15% decade-over-decade thanks to technological advances, lower costs, and greater demand for the cleaner burning fuel alternative.  Natural Gas will play a large role in increasing profitability for these Large Energy Firms, but it will also play a role for speculators seeking out profits themselves.  This is Natural Gas Forecasting from a Technical Analysis perspective.

Natural Gas Forecasting on a Daily Chart

The low point of the 2018 Year for Natural Gas was actually back in February.  Natural Gas is used for heating and during the Northern Hemisphere’s Winter Season actually declined significantly during the worst of the season.  However, looking forward there’s a different story to be told as there is a much room on the upside should the price make a bullish escape out of the Demand Zone.  There’s plenty of clear space all the way to 2.9590.  You could based on this alone set a stop loss at 2.668 and a take profit at 2.7905 or 2.83 (if you are more aggressive).

A zoomed out view of a Daily Chart tells us that the overarching trend is clearly bearish.  Turning the trend in a bullish fashion would require a move above 3.1669.  However, if the price drops below 2.53, this is going to be a freefall down to 2.15.  At this point, there are more barriers on the immediate downside than from the upside.

Natural Gas Forecasting on a 4 Hour Chart

There is a relatively large demand zone that has not been penetrated on a second occasion, it was penetrated last week and the price bounced out within 24 hours.  This demand zone is now weaker than it previously was, but it is still strong enough to reject the price.  The demand zone has two things going for it to provide a bullish case:  1)  It is on a psychological price figure (2.69) and 2) The space that exists above it.

Zoom out and it becomes clear that there are support areas for the price to bounce off, which have not been tested for months.  However, the immediate demand zone is not as fresh as one would think as it had been penetrated three months ago and never re-entered until July 19.  Interestingly, the price similarly came close to 2.69 after a penetration and then bounced upwards back in April.  Could history repeat?

Natural Gas Forecasting for a 1 Hour Chart

There is more pressure to go downwards and re-test the demand zone of 2.673 than test back-to-back supply zones that form resistance.  The price had not penetrated the demand zone until July 19, there was a pinbar that was rejected and a subsequent bullish candle that was extremely strong.  Traders could have made a large return on a very short-lived trade.

The 2.6730 support zone may not be as generous next time around.