Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

Trading positions 

• Natural Gas [NGH22]
  Long around the $4.250-4.300 support area (yellow band) with a stop at $3.930 and targets at $4.820 & $5.290.
• RBOB Gasoline [RBH22]
  No new position justified on a risk/reward point of view.
• WTI Crude Oil [CLH22]
  No new position justified on a risk/reward point of view.
• Brent Crude Oil [BRNJ22]
  No new position justified on a risk/reward point of view.

Regarding risk management, it is always best to define your strategy according to your own risk profile. For some guidance on trade management, read one of my articles on that topic.

Did you miss my last article about biofuels to diversify your portfolio? No problem, you can have a look at my selection through the dynamic stock watchlist.

Are you interested in geopolitics? I published an alternative reading of the Ukrainian crisis.

Henry Hub Natural Gas (NGH22) Futures (March contract, daily chart)

As you can see, the prices just triggered our long entry during the European session, following the market’s opening – below its weekly close from Friday night – just before slowly settling on the provided support (yellow band), which acts as a rebounding floor for the prices.

To get a better view of the price action, let’s now zoom into a 4H chart:

Henry Hub Natural Gas (NGH22) Futures (March contract, 4H chart)

Technically, the market shows an opening gap here, then bottoms at $4.299 as it is likely that some bulls who bought the market at higher levels got stopped around the $4.600 price mark. Potentially, this is where buyers would have placed their stops as this area is located just below the previous swing low from last week. On the other hand, the bears who were shorting the market likely took their profits just around the $4.500 psychological mark, so both bull and bear behaviors resulted in helping prices rebound in that support area.

On the fundamental side, the nat-gas correction likely happened since we had weather forecasts for the next two weeks suggesting a warming outlook (which could slowdown demand). This was coupled with potential supply cuts that may have been provoked by the winter storm blowing through the United States, which was expected to be more manageable and have a less severe impact than expected.

If prices are now being rejected with some bulls taking over, we can expect prices to rebound back towards the High Volume Area, around the Volume Point of Control (VPOC), currently located just above $4.900. Our first target, therefore, remains inside that high-volume area. The overall trend so far remains bullish, which is why we preferred not to take any short trades. If the short-term demand has recently been weakening, we have to keep in mind that the longer-term demand is currently still supported by sustained US Liquefied Natural Gas (LNG) exports.

That’s all folks for today – happy trading!

As always, we’ll keep you, our subscribers well informed.

Thank you.

Sebastien Bischeri
Oil & Gas Trading Strategist