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.
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).