Looking for a Bullish Bottom

Our expectations indicate that as long as the important support level remains at 8.054, it might push the price to the upside to test the resistance level 8.870.

Spot natural gas prices (CFDS ON NATURAL GAS) decreased in their recent trading at the intraday levels, to record sharp daily losses until the moment of writing this report, by -3.78%. It settled at the price of 8.216 dollars per million British thermal units, after incurring heavy losses during yesterday’s trading by It reached -7.91%.

Natural gas rose in early trading yesterday, which closed at a 14-year high earlier this week, but ended the day lower. Prices fell after news reports said a fire had broken out at a Texas export facility operated by Freeport LNG. which may limit the demand for natural gas for export.

In a statement, Freeport LNG said: “An accident occurred at the Freeport LNG facility on Quintana Island at approximately 11:40 a.m. (US Eastern Time), there were no injuries, all employees and contractors were counted and there was no danger to the community. Ocean, the investigation into the accident will continue.”

The Nymex gas futures contract for July was down about 30 cents at midday and not far from an intraday high of $9.664 per million British thermal units, and slid to $8.427 after the news broke. August futures fell 59.9 cents to $8.679.

At first glance, the market’s reaction to the Freeport event seemed justified, with the plant producing about 2 billion cubic feet per day of LNG. As such, any volumes that do not flow into Freeport will either provide more gas to meet local demand or be injected into storage. Both could halt or at least slow the recent rally in prices.

Technically, after the price collided during its recent trading with the resistance level 9.550 that we talked about a lot in our previous reports, we find the price has bounced down from it. This is to correct the main bullish trend in the medium and short term, to start the price in a journey and search for a bullish bottom to take as a base that may help it gain momentum. The positivity is needed to recover, especially with the influx of negative signals on the relative strength indicators. The price remains benefiting from the positive support for its trading above its simple moving average for the previous 50 days.

Our expectations indicate that as long as the important support level remains at 8.054, it might push the price to the upside to test the resistance level 8.870.