Yesterday’s lower than expected EIA Natural Gas Storage Change failed to push Natural Gas higher despite implying that demand for Natural Gas is higher than what we thought. EIA data showed that Nat Gas storage grew by 41 billion cubic feet, 4 billion cubic feet lesser than the expected 45 billion. We can’t say that we are surprised, as price was already heavily bearish before the news release. Hence a mere 4 billion difference in expectations may not be able to keep the bears at bay. Nonetheless, it is still shocking to see the speed in which the bullish numbers were digested and disregarded. Price rallied up to above 3.74 on the back of the news release, but started trading much lower a mere 5 seconds following the initial spike. This makes clear that there are abundant offers above 3.70, suggesting that traders are looking to sell into any short-term rebound rallies, which is something to remember when we face any rebound/corrective rallies in the near term.
From a technical perspective, price is keeping nicely below the the descending trendline. Price is currently trying to break up above the said trendline, with Stochastic readings pointing higher – suggesting that a bullish cycle is ongoing right now. However, given the observations explained above, coupled with the fact that Stoch readings is currently facing a “resistance” of its own, there is a chance that this bullish cycle may be cut short. Hence traders should wait for prices to break above 3.64 resistance and preferably 3.66 in for confirmation that this bullish trend have legs to run.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.