Natural Gas (XNG/USD)Overall Bias: Bearish with potential for a short-term bounce
Key Observations:
1. 1-Month Chart:
• Price Action: The long-term bearish trend is still intact. The price peaked at $9.177 and has since declined to the current level near $2.066.
• Support Levels: Major support is around $1.59. A break below could lead to a further drop.
• Resistance Levels: The resistance at $4.641 is a significant level that will likely cap any upside in the medium term.
• ATR (Volatility): With an ATR of 2.000, we can expect sharp price movements.
2. 1-Week Chart:
• Price Action: Natural Gas has broken below key support levels. The most recent candle shows price stabilizing near $2.066 after a significant drop.
• Support Levels: $1.60 is key weekly support.
• Resistance Levels: Significant resistance is around $4.641 (Fibonacci 0.236 level). The next resistance lies at $3.722 (Fibonacci 0.382).
• RSI: At 30.93, the RSI indicates that the market is near oversold territory, hinting at a potential bounce.
• MACD: Weekly MACD remains bearish, indicating downside momentum.
3. 1-Day Chart:
• Price Action: The price has tested a low of $1.591 and bounced back to $2.066. The price is currently trading below significant moving averages, showing weakness.
• Support Levels: Immediate support is $1.55. Below this level, there is not much support until $1.460.
• Resistance Levels: $2.639 (0.236 Fibonacci) is key resistance on the daily chart. Above this, $3.00 would be a psychological level.
• RSI: RSI at 39.41 is nearing oversold territory, indicating the possibility of a bounce.
• MACD: The daily MACD is bearish, though the histogram suggests the selling pressure might be easing.
4. 4-Hour Chart:
• Price Action: The 4-hour chart shows Natural Gas has formed a bottom near $1.55 and is now attempting to bounce. However, the price is still in a lower high/lower low structure.
• Support Levels: Immediate support is $1.555, which aligns with previous lows.
• Resistance Levels: The short-term target is $2.639, a key Fibonacci retracement level.
• RSI: At 48.60, the RSI is neutral, showing that Natural Gas has some room for upside before becoming overbought.
• MACD: The MACD has slightly turned bullish on the 4-hour chart, suggesting that there could be some short-term upward momentum.
5. 1-Hour Chart:
• Price Action: The price is currently consolidating between $2.066 and $1.555. The 1-hour chart is showing early signs of a potential bullish reversal.
• Support Levels: Strong support is at $1.555. If the price breaks below this, it could test the lows near $1.460.
• Resistance Levels: Immediate resistance is $2.27. A break above this level could lead to a retest of the $3.00 psychological level.
• RSI: The RSI at 57.09 is approaching neutral-to-overbought levels.
• MACD: The MACD is neutral but shows slight bullish divergence, supporting the case for a short-term bounce.
6. 30-Minute Chart:
• Price Action: The price is showing signs of bottoming in the short term and could head towards $2.27 (recent high) before retesting support.
• Support Levels: Immediate support is $1.555, while $1.863 could act as a mid-term support level.
• Resistance Levels: If the price can break above $2.27, a retest of $2.66 is likely.
• RSI: At 62.96, the RSI is nearing overbought conditions, which could suggest a minor pullback or consolidation before a further upward move.
• MACD: The MACD on the 30-minute chart has turned bullish, supporting short-term upward movement.
Trading Strategy:
Primary Bias: Bearish
• Short Position:
• Entry: Consider shorting near $2.27 (Fibonacci 0.764 level) if price shows resistance.
• Stop-Loss: Place a stop-loss above $2.66 (key resistance).
• Take-Profit Levels:
• First target: $1.863 (recent low support).
• Second target: $1.555 (strong support level).
Alternative Scenario: Short-term bounce
• Long Position (Speculative):
• Entry: If the price bounces from $2.066, consider a long position targeting the next resistance levels.
• Stop-Loss: Below $1.555 to limit downside risk.
• Take-Profit Levels:
• First target: $2.639 (0.236 Fibonacci).
• Second target: $3.00.
Risk Management:
• Position Sizing: Due to high volatility (ATR of 2.00), keep position sizes smaller than normal to manage risk.
• Stop-Loss: Ensure stop-losses are placed carefully, especially near support/resistance levels to avoid being stopped out by volatility.
Conclusion:
Natural Gas is currently trading near significant support levels, but the overall trend remains bearish. A short-term bounce could occur, especially if the price holds above $2.066, but the bearish momentum suggests the longer-term outlook remains to the downside. Any upside is likely to face resistance at $2.66 and $3.00. For now, shorting near resistance zones around $2.27 could be the favorable trade, while taking advantage of a potential bounce for short-term gains is also viable for more aggressive traders.
