Buying natural gas as strategy to recover to 3.600

Natural gas prices are showing signs of recovery after yesterday's fall to a two-month low. The main reason for the decline was warmer-than-expected weather forecasts for early February in the USA. The current price increase is due to market uncertainty following the Federal Reserve's decision to keep interest rates steady at 4.5%.

Updated weather forecasts indicate mild climatic conditions across much of the US from February 1 through February 5, lowering heating demand expectations. However, colder weather in the Midwest and Northeast could result in a moderate increase in gas consumption in upcoming days.

Traders are forecasting the withdrawal of 317 billion cubic feet of gas from US storage for the week ending January 24. This could eliminate an excess of blue fuel inventories for the first time since early 2022, reducing oversupply in the market.

Additional support for prices is provided by the US Energy Information Administration's (EIA) long-term outlook. According to their estimates, the Henry Hub natural gas price will grow in 2025. The main driver will be the increase in demand for liquefied natural gas (LNG) from American export enterprises. The benchmark gas price is forecast to rise to $3.10 per million British thermal units this year.

From a technical point of view, natural gas prices are showing the formation of a new downtrend on the H4 timeframe after exiting the uptrend. However, strong support at 3,050 is preventing further selling. To confirm the descending channel, the price should return to the resistance. The Bulls Power indicator (standard parameters) has moved into the positive zone, suggesting possible growth.

Signal:

The short-term outlook for natural gas suggests buying. 

The target is at the level of 3.660.

Part of the profit should be taken near the level of 3.415.

A stop-loss could be placed at the level of 2.845.

The bullish trend is short-term, so a trading volume should not exceed 2% of your balance.