U.S. Markets open in 2 hrs 3 mins

Natural Gas Price Prediction – Prices Drop but Hold Support as Hedge Funds add to Short Positions

David Becker

Natural gas prices tumbled on Tuesday but held support near an upward sloping trend line. This comes as warmer than normal weather is expected to cover most of the United States during the next 8-14 days according to the National Oceanic Atmospheric Administration. The weather is expected to be cooler than normal during the 6-10 day forecast. Hedge funds added to their short position in futures and options according to the latest commitment of trader’s report released for the date ending November 19, 2019.

Technicals

Natural gas prices tumbled on Tuesday after forming an outside day lower on Monday that signaled a down day. Prices held support near an upward sloping trend line that comes in near 2.42. Short term resistance near the 10-day moving average near 2.58. Short term momentum has reversed and turned negative as the fast stochastic generated a crossover sell. Prices are oversold as the fast stochastic is printing a reading of 7, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum negative as the MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices.

Hedge Funds are Long

Hedge fund traders continued to add to their short position in futures and options according to the latest commitment of traders report. Managed money added 41K contracts to short position in futures and options while reducing long position by 8.6K contracts. Total open interest that is short outnumbers today open interest that is long by 137K contract which sets the market up for a short-squeeze. Markets await the inventory report which is scheduled to be released one day early due to the Thanksgiving Day holiday. Expectations are for a 50 Bcf draw according to survey provider Estimize.

This article was originally posted on FX Empire

More From FXEMPIRE: