uploads/2015/06/NG-three-month-ng-chart-June-23-20151.png

Natural Gas Prices Show a Symmetrical Triangle Pattern

By

Updated

Symmetrical triangle pattern

NYMEX-traded July natural gas futures show the emergence of a symmetrical triangle pattern. Prices broke below the trend line support of this pattern on June 22, 2015. Gas prices have been fluctuating between $2.60 and $3 per MMBtu (British thermal units in millions) for the past three months. The mild weather forecast and rising gas stocks are putting pressure on natural gas prices.

Article continues below advertisement

Key pivots

Bearish momentum could push natural gas prices to the nearest support of $2.50 per MMBtu. Prices hit this mark in April 2015. The symmetrical triangle downward breakout could push natural gas prices lower. The slowing demand could also push natural prices lower. In contrast, bullish traders could see resistance at $3.20 per MMBtu. Prices tested this mark in January 2015. The demand from power plants and the warm weather forecast could support natural gas prices.

In the short term, according to the trading range pattern, prices could fluctuate between $2.50 and $3 per MMBtu levels. Prices might average around $2.93 per MMBtu in 2015 and $3.32 per MMBtu in 2016, according to estimates from the EIA (U.S. Energy Information Administration). July gas futures are trading below their 20 and 50-day moving average as of June 22, 2015.

The performance of ETFs like the VelocityShares 3X Long Natural Gas ETN (UGAZ) and the United States Natural Gas Fund LP (UNG) is negatively impacted by lower natural gas prices. They also impact energy companies like Energen (EGN), Occidental Petroleum (OXY), and EOG Resources (EOG). Combined, they account for 2.58% of the Spider Oil and Gas ETF (XOP). The stocks’ total production have a 41% gas production mix.

Advertisement

More From Market Realist