Nat Gas – Bullish Story Continues with Higher Implied Demand

Hourly Chart


Latest report from Energy Information Administration showed a higher than expected implied demand in Natural Gas. EIA Storage Change reflected an increase of 65B cubic feet of Nat Gas supply, lower than the expected  73B and below the 96B increment seen last week. Hence it is no surprise that prices rallied strongly, pushing above the previous weekly high and breaking the 3.40 level, continuing the short-term uptrend that has been in play since 8th August.

It is important to note that price actually suffered some pullback before US open, pushing deep into the underlying Kumo and trading beneath it on a few occasion. However, as a testament of Bullish sentiment, it should be noted that prices actually steered higher, clear of Kumo and right back in the 3.34 – 3.35 consolidation zone of yesterday before the strong news rally happened. This suggest that the news rally may have more legs to run, as evident by the post news rally where prices continued to push towards 3.43 way after the initial snap rally has settled down.

Looking forward, it is possible that a pullback may happen soon even though we are in a strong bullish trend. Looking at price action since the start of current rally, a pullback of around $0.05 tend to occur following a  10 US cents rally. As such, we are due for a pullback very soon should past trends continue. Stochastic readings suggest the same with readings pointing lower with divergence away from the Signal line, suggesting that bearish momentum is gaining pace. However given the overall bullish pressure, do not assume that this bearish run will be able to push lower significantly. 1st level of support can be found around 3.40, while next level of support would be 3.37 – 38 if price does pullback within the next few hours of so. If a pullback only happens next week, it is likely that forward Kumo will be able to provide further bullish support which would render movement below 3.40 even harder.

More Links:
GBP/USD – Surges Strongly through 1.56 to Two Month High
AUD/USD – Retraces Strongly from Resistance at 0.92
EUR/USD – Surges through 1.33 and Looks to Resistance at 1.34

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.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu