$UGAZ: Natural Gas NG Bottoming Pattern; Unfilled Gap.
Potential bottoming patterns are seen on multiple time frames of natural gas contracts. June Natural Gas contract and Chande Momentum charts show higher lows.
NG: However, NG June contract chart is pointing lower due to fundamental factors - economic shutdown and overall reduced demand. If prices hold support at $1.70 on Friday into closing, that would be an encouraging sign for the next week. Otherwise, a correction is possible. From technical standpoint, there is an unfilled gap from Sunday May 17th, up from $1.63 to $1.70 on the open. This gap maybe getting filled in the near-term.
UGAZ: Corresponding gap up from May 17th has been filled. However, if NG prices are going lower, possibly toward $1.62-$1.60 support, UGAZ may fall temporarily into $12-$14 range. Otherwise, $15-$16 seems to serve as near-term support.
Tradex
$UGAZ: Natural Gas NG is Waiting for June HeatNatural gas futures contracts NG finished the day lower after EIA inventory report showed a less than expected build of 81 bcf vs 98 bcf predicted. Regardless of a substantially lower build, NG prices dropped 3.3% on Thursday. Short-term momentum turned negative, while medium term momentum is neutral pointing toward consolidation and possibly lower prices. The chart is slightly below 50% retracement of its recent move up, between $1.60 and $1.89. It is the middle of the range. A move in either direction is possible from here. Near-term resistance is seen at $1.75, level of prior support. Major support levels remain $1.70 and $1.60.
UGAZ is trading within a range, between $15 and $16, as long as NG holds support at $1.70. Lower prices are possible; more consolidation seems likely before we go higher.
The weather is expected to stay within a comfortable range between 60 and 80 degrees, with some heat up to 90 degrees in the Southwest. However, May is considered a shoulder month, when little additional demand is generated at these temperatures. The economy is reopening slowly, with demand growth expected to improve in June, when we switch to trading July contract.
$UGAZ: Natural Gas NG is Looking for DirectionNatural Gas July futures NG gapped up on the open from $1.63 to $1.75, but then dropped to $1.71. 2 Hr MACD chart crossed forming some sort of consolidation zone. NG is trading higher July contracts.
The fundamentals remain bearish: oversupplied condition vs. low demand. For the next two weeks, the weather is not expected to be hot enough to generate substantial demand. Although, the economy is re-opening, we may remain in oversupplied territory at least until June. The US natural gas rig count fell only by 1 (EIA), meaning production is still high.
UGAZ: A divergence between price and momentum has been observed on the 2 Hr chart, pointing toward near-term higher prices, or consolidation. RSI is in oversold territory. A near-term resistance for UGAZ is seen at $19-$21 level. NG showed nearest resistance at $1.75. If we can break through this level, then the price can go higher toward $1.8-$2.0. That may bring UGAZ to $25-$27 level, if natural gas prices rebound sharply during this week. Otherwise, lower levels should be expected. If NG stays low for the next 2-3 weeks, UGAZ may drift down into $8-$12 range.
The pattern emerging on NG 4 hr chart is reminiscent of the consolidation period between 3/16 and 3/30. New lows are still possible before we go higher.
As we are approaching a high cooling demand summer period and re-opening of the economy, natural gas demand is expected to rise, although, gradually. Without sharp rise in demand, or sharp decline in supply, NG prices will remain capped.
UGAZ: Bounced, But Still Forming a BottomNG: Natural Gas June futures rallied on Thursday into EIA report, which showed in-line storage build of $103 bcf. Natural gas stocks were 799 bcf higher than this time last year. The fundamentals remain on the bearish side with low consumption and warming weather. However, the economy is reopening, which is a bullish factor.
NG chart dipped after reaching nearest resistance at $1.7 level, still within existing downward trend. Short-term support was found at $1.66. The chart appears to be forming a bottom, bouncing off oversold condition observed earlier on 4 Hr chart. Short-term momentum is positive, medium-term momentum is negative pointing toward consolidation, or lower prices. Support is seen at $1.6, resistance at $1.85.
UGAZ: Based on Daily charts MACD, Chande Momentum, and CCI, a definitive bottom has not been formed yet. No divergences between momentum and price, similar to the pattern observed in late March, have been observed at this time. However, 4 Hr RSI chart (not listed here) showed a bottoming pattern at $1.6 NG level. For UGAZ, a level around $16 may hold as support, as long as NG price stays above $1.65 level. Otherwise, $15 handle may correspond to $1.6 level on NG chart.
UGAZ: Still Looking for a Bottom - UpdateNatural gas futures contracts NG has drifted lower on Wednesday reaching $1.6 with corresponding UGAZ price at $15.27. The NG chart moved a little higher from there trying to establish a bottom. Should we not hold $1.6 level, the next possible level of support is $1.5. In that case, UGAZ may go lower toward $13 handle. Near-term resistance is seen at $1.8 and $1.87.
Short term momentum is negative. The fundamentals are still bearish ahead of EIA report, as total consumption per day is expected to decline by 3.9% from 2019 average. Thursday report - 103 bcf build is expected.
UGAZ: Looking for a Bottom? Natural gas futures contracts moved lower this week on low demand due to ongoing COVID lockdowns and warming weather. Support seen earlier at $1.72, has been broken. Next possible levels of support are $1.6 and $1.5. Another triple digit injection of around 104 bcf is expected on Thursday (EIA report). Supply-Demand deficit is expected to narrow: April -6.64 bcf/d; May -0.3 bcf/d; June - 1.99 bcf/d. Consumption growth is projected to keep slowing down: April +7.7%; May +0.3%; Jun +0.05% YoY (BlueGold Research). Supply is still stronger than demand in the near-term, unless companies will start filing bankruptcies.
MACD crossover for UGAZ on 2 Hr chart is pointing toward lower prices. If NG prices are to drop to $1.5, a bottoming pattern for UGAZ may form this week at around $17 -$15 levels. NG futures are oversold on 4 Hr chart, but may continue sliding on a daily chart. We may see a recovery after Thursday EIA report, once all the news is priced in.
S&P500 Rally Reached 200 EMA. Fundamentals remain bearish.SPY ETF (S&P500) has reached its 200 EMA at $294 (purple line). This is a significant level, as it may serve as resistance. If we break through $300, then the market may continue going up to $340. 50 day EMA (red) is close to crossing 100 day EMA (green) from below, pointing toward higher prices. MACD chart is near the top, but is still pointing upward. Based on technicals, the rally may continue. Caution may be a good approach to taking long exposure, as traders are selling into these rallies. The fundamentals remain bearish.
Gold Futures (GC): Consolidating Before a Break Out?Gold Futures (GC) chart has been coiling on a daily chart, trading risk-on along side with SPY (SPX500). The main trend for gold is up. MACD and RSI charts are pointing downward. Secondary lower top has been formed. Yet, prices are holding up. FOMC decision to keep rates unchanged at 0.25% was bearish for traders hoping for negative rates. However, facing high unemployment numbers on 4/30/2020 and $DXY decline, gold may appreciate further. Pivot point: $1727.50. If bullish price action, then potential move up to $1764 - $1800. If bearish, then potential move down to $1682-$1660, which should serve as support.
