Natural Gas Price Fundamental Daily Forecast – Next Major Move Determined by Reaction to $1.833 – $1.878

Natural gas futures are trading higher on Wednesday despite calls for warmer weather and a steady balance. The move suggests this week’s rally is likely being driven by profit-taking and short-covering ahead of the official end of the U.S. heating season. This week’s price action is also being influenced by outside concerns such as stock market volatility and the potential impact of the coronavirus on the U.S. economy.

At 15:22 GMT, April Natural Gas futures are trading $1.828, up 0.028 or +1.61%.

Despite the early strength, the overnight guidance did little to alter the weather picture, with forecasters continuing to predict widespread warmer-than-normal conditions deep into the month of March, Natural Gas Intelligence reported.

Bespoke Weather Services

“So far, all of the changes we have seen this week have been detail changes, as the big picture remains unchanged,” Bespoke Weather Services said. “A strong upper level ridge is forecast to persist in the eastern half of the nation more often than not, resulting in above to much above normal temperatures in key areas of the Midwest and East, as well as down into parts of the South at times.”

Maxar Weather Desk

Maxar’s Weather Desk similarly characterized Wednesday’s updated forecast for the period on Monday through March 13 as retaining the “overall themes” from its previous forecast, noting only small warmer changes in the East and the Rockies during this time frame.

“Above normal temperatures span most areas from the Rockies points eastward, with risks being mixed depending on the details surrounding a series of storm systems tracking through,” Maxar said.

Further out in the March 14-18 window, Maxar said its updated forecast “carries similar themes” but leans in the warmer direction for the eastern half of the Lower 48.

“The large scale pattern is of positive Arctic Oscillation characteristics, where still stronger than normal winds surrounding the Arctic act as a barrier to prevent polar air from spilling southward,” the forecaster said.

Daily Forecast

The main trend is down according to the daily swing chart. The main range is $2.024 to $1.642. Its retracement zone at $1.833 to $1.878 is the primary upside target. The market tested this zone earlier today.

Since the main trend is down, sellers are likely to come in on the first test of the retracement zone. They are going to try to form a secondary lower top. This could lead to a 2 to 3 day pullback of its rally from $1.642 to $1.845. This would make the next downside target $1.744.

Overcoming and sustaining a move over $1.833 will indicate the buying is getting stronger. This could trigger a surge into $1.878. Overcoming this level could fuel an acceleration to the upside and signal a possible short-squeeze may be taking place.

This article was originally posted on FX Empire

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