Natural Gas: After Monster Monday, Tuesday Could Be a Turning Point

Despite several challenges, natural gas futures appear poised to gain momentum, as lower prices could reduce production fears. On Monday, natural gas futures opened with a gap-up and managed to hold onto that gap with strong price momentum, despite bullish and fearful sentiments.

In my previous analysis, published on May 3, 2023, I explained that the Fed's decision could impact global markets, especially commodities such as energy and precious metals.

Natural Gas Futures 1-Hour Chart

Technically, in a 1-hour chart, natural gas futures look ready to move upwards this week, with price momentum favoring bulls, despite increasing selling pressure.

Since the start of the week, natural gas futures have maintained above $2, indicating a surge in bullish sentiment among traders, even after bearish inventory announcements on Thursday.

Natural gas futures are holding above the 200 DMA in a 1-hour chart, which could indicate a sustainable move above the immediate resistance at $2.248, leading to a continuation of the trend in favor of bulls until this week's close.

A breakout above $2.412 will be the first confirmation of this bullish momentum before the bulls move to hit their next target at $2.588.

On the other hand, a downward move to $2.086 presents an opportunity for long positions, with a stop-loss at $2.023 (3%) and a target at $2.587 (24%).

The risk-reward ratio of 1:8 could attract large bulls to take long positions in the event of a downward move on Tuesday.

Disclaimer: The author of this analysis does not have any position in natural gas futures. Readers should take a trading position at their own risk, as natural gas is one of the most liquid commodities in the world.