$NATURALGAS near strong resistance but not entirely exhaustedCAPITALCOM:NATURALGAS is entering in strong seller territory again and it's going to be tough to crack the resistance above where we have 200 ema on the weekly chart with a total volume of approximately 513K orders of which sellers beat buyers by 39%. Right above that we have another 721K orders where sellers dominate by 70%. But contrary to last time where we visited this area (30th Sep) things me be a bit more promising from a technical perspective.
On the weekly chart RSI and OBV are less overbought than the previous attempt and from the recent swing high (from previous week) they point upwards hinting at further momentum continuation with price sitting right above the 50 ema (weekly)with the 20 ema (weekly) about to crossover for yet another bullish sign. Lastly, we have price sitting above a support of 220K orders with buyers being 14% more than sellers (not a very strong support when considering the resistance right above us though).
On the daily chart we have price above 20, 50 and 200 ema with RSI and OBV increasing sharply and not yet overbought or indicating any divergence (so far) which is promising for further uptrend. Price is about to penetrate the supply zone at 2.98-3.12 with about 14% more buyers than sellers. A volume based support is visible at 2.86-2.81 with the demand zone being way lower near summer lows.
On the 4h chart RSI and OBV appear overbought, however no regular bearish divergence can be observed, indicating that the current trend strength remains unchanged (remember that markets can remain in overbought/oversold situations for an extended period of time - and a reversal is more likely to occur when they start becoming less and less overbought as price makes higher highs i.e regular bearish divergence). Recently we broke yet another resistance and price might return and retest this area near 2.99-2.91. A supply zone is visible at 3.12-3.19 hinting at the next possible resistance in the short term. Lastly, Elliot's 5wave model predicts that given the existing trend the next pivot point is near 3.37 before we see a substantial retracement at least on the 4h chart.
Finally on the 1h chart we start observing signs of trend weakness with price making higher highs but at the same time RSI and OBV being less and less overbought and a reversal candlestick pattern being formed. Also from the same 5wave model we are theoretically at a pivot point, with an expected retracement until 2.57! The demand zone is observed at 2.94-2.97 and might act as a support in the future for further uptrend continuation.
There are some problems with the above signs of weakness on the hourly though and the most important one is that all the divergences observed during last session occurred with suboptimal volume. This might be an attempt of manipulation of a fake breakdown or it can simply mean that people are simply collecting some of their earnings either as part of their usual risk management strategy or due to the fact that above (weekly chart) we face a very strong resistance from a technical perspective.
To sump up, it is clear that we are headed towards a strong resistance in fact we are already in it for some of the charts: 3.03-3.25 (w), 2.99 - 3.14 (d), 3.11-3.18 (4h), 3.10 - 3.19 (1h).
We have possible support based on volume at 2.59 (w), 2.86 (d), 2.97- 2.85 (4h) and 2.97-2.94 (1h).
Trend is still strong on the w, d and 4h chart with signs of weakness observed on the 1h chart. Since we made almost 14% in a single week, some retracement would be reasonable but then again the market maker has his own reasoning. Given that personally I do not see bearish divergence occurring at 4h or above, I am leaning towards the assumption that any pullback we might see in the next week is likely to find support within the volume depicted in the 4h and 1h charts.
Personally I will be looking to buy the dips near previous volumetric orderblocks if price action shows that they hold and price bounces up from there with bullish divergence.
