Natural gas is trending higher on its hourly period, moving within a rising channel and finding support in the middle channel area of interest. Price could be setting its sights higher on the upside targets marked by the Fibonacci extension tool.
The 50% level appears to have held as resistance, so natural gas could return to nearby support levels. The middle of the channel is around $6,100, then the channel support is $5,800-$5,900.
A continuation of the rise could take natural gas to the 61.8% extension near the top of the channel at $6,300. The 76.4% level is at $6,410, then the full extension is at $6,577 beyond the channel resistance.
The 100 SMA is above the 200 SMA to confirm that the path of least resistance is up or that the uptrend is more likely to gain traction from here. The price is moving above both indicators, so these could hold as dynamic support on the downside.
The stochastic is headed lower to show that selling pressure is in play and the oscillator has plenty of room to slide before indicating oversold conditions. The RSI is at a midpoint to reflect consolidation, but appears to be rising to indicate a pick-up in bullish momentum.
Natural gas could take cues from the Energy Department’s upcoming inventory report, as another smaller build in inventories would signal that demand is starting to pick up.
Temperatures have been dropping in several parts of the world, leading to stronger purchases of heating staples. Even colder winter conditions could trigger another energy crisis, especially as the conflict between Russia and Ukraine has kept global supply levels tight.
Risk appetite spurred by the release of the FOMC minutes later this week could also weigh on commodity prices in general.
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