In accordance with the previous forecast, US natural gas prices surged ahead of the heating season. A flag pattern formed on the daily chart in the second half of October, with sharp upward momentum followed by consolidation within a flat channel. At the end of last week, this pattern repeated: prices stabilized after a surge. If this flag unfolds in the same direction as the initial movement, it may push quotes above the $4 level, updating June highs.
Technical indicators, however, signal a potential pause in the current rally. The Relative Strength Index (RSI) and Stochastic Oscillator have reached overbought territory and are poised for at least a slight pullback. This local correction would allow traders to open long positions at more favorable prices. The forming golden cross—the intersection of the 50- and 200-day moving averages—increases the likelihood of renewed upward momentum. A similar signal at the end of last year led to a more than 30% rally in the natural gas market.
Fundamentally, such a rise is supported by seasonal factors: temperatures in the Northern Hemisphere are declining, driving up heating demand. While a week ago, US gas inventories showed an increase of 74 billion cubic feet, today's forecast is only 33 billion. In the near future, these reports will reflect a higher consumption of accumulated reserves.
Rising fuel prices are also caused by expanding US LNG exports. Late last month, a new record was set at 16.6 billion cubic feet per day. However, in early November, deliveries exceeded 17 billion cubic feet. European countries, whose gas storage facilities are only 83% full compared to the seasonal standard of 92%, are demonstrating increased demand for American LNG. This is a significant factor supporting further price gains.
The following trading strategy may come into play:
Buy natural gas in the $3.7–$3.85 range. Place Take profit 1 at $4, Take profit 2 at $4.15, and Stop loss at $3.6.
This content is for informational purposes only and is not intended to be investing advice.
