What’s the Crucial Support and Resistance for Natural Gas?



Crucial support and resistance for natural gas

The EIA (U.S. Energy Information Administration) lowered the natural gas production estimates. Also, colder-than-average temperatures are expected. As a result, natural gas (UGAZ) crossed the price levels of $1.95 and $2.05. The price level of $2.05 is an immediate support level for natural gas futures. This number is the 50% retracement of natural gas futures from the high of $2.49 on January 8, 2016, and the low of $1.61 on March 4, 2016. At the 38.2% retracement level, $1.95 is the next important support level for natural gas futures. However, the next immediate resistance is at the price zone of $2.28 at the 76.4% retracement level. This technical level could be an important reference point for prices during the release of inventory data on April 21, 2016.

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Moving averages

As of April 20, 2016, natural gas futures were 4.2% above their 100-day moving average and 7.4% above their 20-day moving average. After April 11, 2016, when the EIA lowered its estimates for natural gas production, natural gas futures convincingly moved above the 100-day and 20-day moving averages.

Natural gas ETF

The bullish technical signal for natural gas prices is a good indication of the United States Natural Gas (UNG). On a YTD (year-to-date) basis, UNG has lost about 18.3%. The above graph shows UNG’s YTD price performance. A bullish technical signal for natural gas prices is a good indication for natural gas–weighted stocks such as Cabot Oil & Gas  (COG), EQT (EQT), and Rice Energy (RICE).


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