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Technical Analysis #C-NATGAS : 2015-06-09

Estimated decline in shale gas output

Today we present you NATGAS futures CFDs. Being one of the largest distribution hubs in the USA, Henry Hub lends its name to the pricing point of these futures contracts. Their price is expressed in American dollars per 1mln British thermal units. The gas futures have marked a sharp increase for last two days due to US Energy Information Administration (EIA) report, forecasting the decline in gas output in July. At the same time experts anticipate global liquid gas demand growth. In particular, International Energy Agency estimates that the import by Europe will rise 100%.

Oil and Gas Production in the USA

According to EIA, gas production in July will drop 0.5%, while oil extraction may fall 1.6%. That is why oil prices may potentially rise. We have chosen natural gas because its chart gives more convenient technical analysis signals. Besides, market participants expect Iran to raise oil supply to global market in July due to sanctions lifting.

NATGAS

On the daily time frame the NATGAS:D1 chart have been traded in a range below the 200-day Moving Average for 6 months. Two days ago it rebounded from the lower border and crossed the upper fractal and the Parabolic signal. Bollinger Bands started expending and turning up. Parabolic has shaped the first buy signal. MACD bars have not yet confirmed it. RSI-Bars escaped the oversold zone and broke out the 50 mark. It does not indicate divergence. The bullish momentum may continue, if another NATGAS bar closes above the second fractal high at 2.9. A stop loss may be placed at the latest local three-year low at 2.47. After pending order activation the stop loss is supposed to be relocated every 4 hours near the next fractal low, following Bollinger and Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. After the position opens, the most cautious traders may switch to the H4 time frame and place a stop loss, moving it after the trend. If the price reaches the stop loss without triggering the order, we recommend to cancel the position: the market sustains internal changes that were not considered.

 

Position Buy
Buy stop above 2,9
Stop loss below 2,47


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