It appears that natural gas might be in the process of bottoming since the current price range has been used as support in January and March this year, as well as price is now above the 50-day moving average.
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New York, NY (PRWEB) May 23, 2012
Natural gas has hit decade lows, because of the mild winter and a glut of new supply hitting the markets due to new techniques like fracking, but Sasha Cekerevac, contributor to Profit Confidential, thinks that recent developments in the energy markets show that perhaps there is some slight flicker of light at the end of the tunnel when it comes to natural gas.
“The excess amount of supply of natural gas being dumped into the energy markets is driving down natural gas prices and filling up storage facilities,” says Cekerevac. “But, as electric utilities transfer from coal to natural gas generation, this has started to use up some of the supply in the ground.”
In the article, Technical Analysis of the Natural Gas Market, Cekerevac notes that there are several technical indicators that appear to show that natural gas is making a bottom.
“Natural gas came off a new low at the end of April below $2.00. This comes after the move down from last summer,” says Cekerevac. “It appears that natural gas might be in the process of bottoming since the current price range has been used as support in January and March this year, as well as price is now above the 50-day moving average.”
Cekerevac also notes that there was a divergence between the price of natural gas and the Relative Strength Index as well as the moving average convergence/divergence.
“All the signs point to a rebound in natural gas prices, most likely up to the 200-day moving average,” says Cekerevac. “A break below $2.20 would be a bearish sign and a retest of the lows is most likely at that point.”
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