Natural Gas Prices Technical Analysis | Natural Gas Prices Trading: 2017-10-16 | IFCM
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Natural Gas Prices Technical Analysis - Natural Gas Prices Trading: 2017-10-16

Cold snap is expected in the US

In the US, cold snap is forecasted at end of October 2017. Will there be an increase in the prices of natural gas, which is widely used for heating?

According to the Edison Electric Institute, the demand for electricity in the United States and its output increased by 3% in a week, which ended on October 7. This week, gas production in the US decreased to 72.2 billion cubic feet per day compared with 73.3 billion in the first week of October 2017 and a 2-year high of 74.8 billion cubic feet per day in late September. As reported by the U.S. Energy Information Administration, according to the results of this week, gas reserves in the US amounted to 3595 cubic feet. This is by 4% lower than the last year's level. A small reduction in reserves may be caused by the growth of gas exports from the US this week to 8.5 billion cubic feet, which is by 67% more than a week earlier. It should be also noted that oil has risen by about 15% since July 1, 2017, and natural gas in the US – only by 3%. Meanwhile, these two assets move synchronously quite often.

NATGAS

On the daily timeframe, NATGAS: D1 overcame the resistance line of a downtrend and resumed the uptrend. It also exceeded the 200-day moving average line. The further price increase is possible in case of cold weather in the US and an increase in exports.

  • The Parabolic indicator gives a bullish signal.
  • The Bollinger bands have narrowed markedly, which indicates low volatility. They are titled upwards.
  • The RSI indicator is above 50. No divergence.
  • The MACD indicator gives a bullish signal.

The bullish momentum may develop in case NATGAS exceeds its last high and the upper Bollinger band at 3,111. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low and the Parabolic signal at 2,9. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level at 2,9 without reaching the order at 3,111, we recommend cancelling the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

PositionBuy
Buy stopAbove 3,111
Stop lossBelow 2,9

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Note:
This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.

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