A sharp fall in natural gas prices made Tuesday morning a concerning day for investors. The streams of economic data prevalent primarily in the European market were the most significant indicators for this decline. This turning occurred after Russia went to war with Ukraine. However, ordinary people became happy with low rates after continuous inflation. As inflation started diminishing, the European natural gas market also showed signs of weakness. The continent successfully brought a fabulous alternative to European citizens in place of Russian gas.
Traders are now expecting a slowdown in natural gas prices. The mild winter times of Europe also feared an insufficient supply of Natural Gas in the country. Moreover, Russia practiced stocking the gas, suspecting a recession in the future. But it is crucial to determine what effect this situation brings on the overall market conditions. The energy demand is also going down with these effects in view. There is no doubt that the forecasts of the recession have a high chance of becoming true, with worldwide consequences.
The crash is more than 50%, as recent reports show. People expect the final notification from International Monetary Fund regarding this situation to be out soon. Only experts can now give a genuine forecast to determine the fall or rise of the worldwide Natural Gas rates.
The stock market reflected a sharp fall of Natural Gas Futures of Dutch T.T.F on Tuesday from 88 Euros to 76 Euros. This accounted for a reduction of about 13% from the prices prevalent previously for one megawatt-hour. Although there were signs of a steady decline in the Nuclear Gas rates across Europe, the August results indicate something else. It showed a considerable peak, around five times the present prevalent prices, amounting to around 340 euros for a megawatt-hour.
The chances of a recession are still there from the sudden decline last Tuesday, and the warning from International Monetary Fund acted as “oil in the fire.” However, analysts believe that Europe will be able to meet the high demand for Natural Gas this winter, unlike the last fall. Hence, the price is no longer going to be excessively high.
Technical Levels of Natural Gas
“Natural gas has corrected over 50 % from the past four weeks… Can we expect the sharp rise from the support zone!”
Technically, The weekly close has turned worse for bulls ,Natural gas is continuously crossing it’s all downside barriers to trade lower. and breached major support zone of 296 and gave a weekly closing below it.
Natural gas has its major support at 260 and major resistance at 345–390 levels.
Bears are dominating the price from past four weeks. If it manages to close below 260 then we will see a sharp downside move till 230 and then to 195 levels in days to come. Its has resistance at 345 if break and sustain above 345 will negate our view in the natural gas. It had broken support offered by a falling trendline in January around 296. Price has corrected from the past four weeks after the breakdown and is now showing signs of a temporary bottom in place.
On the other side, Natural gas next contract trading below the support zone which indicates that bears are dominated the market. However, we can be expected sharp U turn from the bottom levels.
Now, what’s ahead????
Natural gas has taken support of the lower levels, and a bounce can be expected from the support zone. Traders are advised to do accumulate the stock around 260 for the upside target of 325 and then to 345 levels in the day’s to come.
“Recommendation for long term holding traders:” If natural gas manage to rise upto resistance level 345 before hit the price 260 then holding traders can close position and risky traders can reverse position for downside target of 300—260 and maintain stop loss above 400 because we don’t see big rise in coming weeks. Market will play in range bound so holding traders manage there average and try to come out.
Support and stop loss remain at 288 levels on closing basis as per recent clip from Mr. Manoj Jain