Natural Gas Golden Cross Complements the Favorable Fundamentals
NGAS Analysis
After a poor start to the year, natural gas prices soared in the second quarter, largely due to improved supply demand dynamics. Major drillers have lowered their activity this year, with Chesapeake standing out, with the more than 20% y/y output reduction forecast [1]. The International Energy Agency still expects production growth of around 1.5% this year, but expects consumption to outpace it, with a 2.3% increase [2]. The main culprits of the acceleration are fast-growing Asian economies like China and India.
The favorable fundamentals are now complemented by the Golden Cross Technical formation on the daily chart of NGAS (EMA50>EMA200), which is often a precursor of protracted strength. Drilling down to the H4 chart, the commodity stays in control as it defends the EMA200 (black line), following its recent pullback. Above it, bulls have the ability to push for higher highs towards 3.3974.
On the other hand, there are risk to the optimistic outlook, as China's post-pandemic recovery remains bumpy, EU counties extended their voluntary 15% gas demand reduction for one year [3], while drillers could increase their output as prices rise. As a result, we can deeper correction, but the daily Ichimoku Cloud can provide a strong buffer.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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