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Natural Gas price is seen consolidating the previous day’s strong move up.
The technical setup favours bulls and supports prospects for further gains.
A break below the $2.640-$2.6375 confluence will negate the positive bias.
Natural Gas price struggles to capitalize on the previous day’s strong intraday rally from the $2.8520 area and oscillates in a narrow trading band during the Asian session on Tuesday. The XNG/USD remains below over a one-month high, around the $3.0350 area touched last Friday, though the technical setup suggests that the path of least resistance is to the upside.
The recent repeated bounce from the 100-day Simple Moving Average (SMA) and a sustained strength beyond the very important 200-day SMA favour bullish traders. Adding to this, technical indicators on the daily chart are holding comfortably in positive territory and are still far from being in the overbought zone. This, in turn, validates the near-term positive outlook for the XNG/USD and supports prospects for a further appreciating move.
Some follow-through buying beyond the $3.000 psychological mark will reaffirm the constructive setup and lift the XNG/USD to the next relevant hurdle near the $3.1875 zone. The said area represents the top boundary of a multi-month-old ascending trend channel, which if cleared decisively will mark a fresh breakout and pave the way for additional gains.
On the flip side, the $2.8520 region, or the 200-day SMA, might continue to protect the immediate downside. A convincing break below will expose the monthly trough, around the $2.7150 area before the XNG/USD drops to the $2.6400-$2.6375 confluence. The latter comprises the 100-day SMA and the ascending trend-channel support, which if broken decisively might shift the near-term bias in favour of bearish traders and prompt aggressive selling.
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