Analysis of natural gas futures in a weekly chart indicates that despite an 81-degree fall in natural gas prices in the last nine weeks amid warm weather conditions at this time of winter seems to be an unnatural move.
This steep fall has propelled fear among the bulls, as the selling pressure has increased manifold, as natural gas futures had found a breakdown below 200 DMA, which is at $3.754 in a weekly chart.
Now, 200 DMA has become a significant resistance for the bulls, as every rally finds a sell-off during the last three weeks despite repeated attempts by the bulls.
On the other hand, $3 is a pivotal point for both the bulls and bears this time, while the winters still have to pass through a significant portion of this season despite a messy weather pattern for the next six days.
Natural Gas Futures Weekly Chart
Technically speaking, in a weekly chart, natural gas futures are currently trading below the 200 DMA, despite some reversal during the last few hours from the weekly low at $3.091 is merely an initial indicator of the thick presence of big bulls below the weekly close at $3.174.
Undoubtedly, the weekly opening levels will define the further intention of both the bears and the bulls as sustainable moves by the natural gas futures, above or below $3, will confirm the next direction for the natural gas prices.
On the bullish side, a gap-up opening above the immediate resistance at $3.535, followed by sustainable moves above this level, could result in a breakout above the 200 DMA.
On the bearish side, a gap-down opening below the immediate support at $3.101, followed by sustainable moves below this level, could push the natural gas futures to test the next significant support at $2.880.
Undoubtedly, a sharp reversal could generate a heavy buying spree by the desperate bulls despite the odd weather conditions.
I conclude that the whole focus will revolve around $3 during the first two trading sessions of the upcoming week as the weather could turn colder from Jan. 28 – Feb. 2.