Partner Center Find a Broker

Heads up, energy traders!

I’m seeing a bearish reversal chart pattern on the 4-hour chart of natural gas, with a bit of downside confirmation to boot.

Will we see more losses from here?

Natural Gas: 4-hour

Natural Gas 4-hour Chart

Natural Gas 4-hour Chart

Natural gas is in the middle of completing a head and shoulders chart pattern, and it looks like the second shoulder is about to form.

Price just fell through a short-term rising wedge support to confirm that a drop of the same height as the consolidation pattern would follow.

This could be enough to take it down to the neckline around $6.500 next. Stochastic is looking favorable for sellers, as the oscillator is just bracing to head south from a long stay in the overbought zone.

However, the 100 SMA is still above the 200 SMA to indicate that the path of least resistance is to the upside. In other words, there’s a chance the uptrend might resume!

It could all boil down to the upcoming natural gas inventory report from the Department of Energy, as analysts are projecting a larger build. An increase of 90 Bcf is eyed, following the earlier 76 Bcf gain.

Note that rising temperatures are weighing on purchases of heating commodities while summer months are closing in. A larger than expected build might spur even sharper losses for natural gas.

Besides, the EU seems to be hitting plenty of roadblocks when it comes to implementing a full embargo on Russian fuel, which eases global supply concerns in the near-term.

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.