Natural Gas (NATGAS/USD) Price Technical Analysis for Jan. 17, 2022

Natural gas could be ready to resume its reversal from the long-term downtrend, as price is finding support at the broken trend line visible on the 4-hour chart.

The Fibonacci extension tool shows the levels that buyers could be aiming for. The 38.2% level is at $4.629 then the 50% extension is at $4.787. Stronger bullish pressure could take it up to the 61.8% level at $4.944 and the swing high or the 76.4% level at $5.139. The full extension is at $5.453.

The 100 SMA just crossed above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. Stochastic is indicating oversold conditions and is turning higher to show that bullish pressure is in play.

RSI hasn’t quite reached the oversold region yet, but the oscillator is also pulling higher to suggest that buyers are eager to return.

Natural gas could be in for its seasonal rally, as demand for heating commodities picks up during this time of the year and lasts until a few weeks. Winter season has set in several parts of the US, and the latest inventory reports confirm that purchases have been stronger.

The recent report from the Department of Energy revealed a draw of 179 Bcf versus the estimated 138 Bcf reduction, indicating that demand was stronger than expected or that supply has been subdued. Another larger than expected draw this time could mean more upside for the commodity.

Risk sentiment would likely push commodity prices around as well, especially with all the attention on the Omicron variant and its potential impact on global growth. So far, reports are suggesting that top economies like China are able to weather the setbacks, so stimulus could soon be reduced and monetary policy tightening could take place.