October natural gas futures are nearly flat shortly before the regular session opening on Tuesday. There seems to be a stalemate at a minor resistance zone with swing chart traders leaning bearish and 50-day moving average traders hoping for a shift in momentum to the upside.
The main trend is down according to the daily swing chart. A trade through $3.026 will change the main trend to up. A move through $2.753 will reaffirm the downtrend. The 50-day moving average is at $2.862.
The short-term range is $2.668 to $3.026. Its retracement zone at $2.847 to $2.805 is a potential support zone. Last week, the market broke through it to $2.753, however, quickly regained it. The minor range is $3.026 to $2.753. Its retracement zone at $2.890 to $2.922 is currently acting as resistance.
What to Watch
TTF near €84 is the story that changed this week. If European prices stay at these levels or push higher, the LNG pull on U.S. supply does not let up regardless of what domestic weather does. A drop in Middle East flows through Hormuz would widen the gap further. That is the bullish variable that has not been fully priced into Henry Hub yet.
Domestically, the weather models Tuesday and Wednesday will tell traders whether the southern heat extends past September 28 or starts to break. Production at 114.4 Bcf per day is the wall every rally has to climb. Thursday’s storage report is where the whole week comes together. The surplus has been the bears’ best argument all year. A build under 30 Bcf starts to chip away at it. Anything above 40 Bcf and the production story wins again.
The bias leans bearish with the main trend down on the daily swing chart. The 50-day moving average at $2.862 is holding as a pivot. The minor retracement zone at $2.890 to $2.922 has capped every push higher this week. $3.026 changes the trend. $2.753 reaffirms the downtrend and that level held once last week. Thursday’s data determines whether it has to hold again.
More Information in our Economic Calendar.
