Natural Gas Witness an Increase in New York Trading, Showing Signs of Accumulation Phase

On Monday, Natural gas trading in New York saw a notable 3% increase, successfully breaking away from its support level once again. Despite forming an uptrend from its April lows, Natural gas has yet to transition into an acceleration phase.

The trajectory of gas prices saw a low point in April, slightly above the $2 mark, before initiating an upward trend. Presently, prices have surged by 34% from those earlier lows, reaching $2.75. This climb has been relatively steady, especially when considering that US gas prices peaked at nearly $10 approximately a year ago, marking a nearly fourfold increase.

The current price movement is reminiscent of a classic accumulation phase following a period of capitulation. However, those with an optimistic outlook should exercise caution, as periods of little attention to rising gas prices can endure for quite some time.

The uptrend channel, stemming from the April lows, has consistently served as a supportive boundary since July, catalyzing increased gas purchasing. While there were attempts to breach this trend in both August and earlier in August, gas has managed to resolutely return to this trading corridor.

Remarkably, the lower boundary of this channel closely aligns with the 50-day moving average, which has undergone repeated tests of its strength since June. Its upward trajectory since the commencement of the summer provides the bullish side with an additional argument.

By successfully holding onto the lower boundary of the channel, Natural Gas appears to be on a trajectory toward its upper boundary, positioned beyond $3.16. It's worth noting that the 200-day moving average is slightly higher, at $3.23.

One critical aspect to monitor is whether gas can consolidate its position above the 200-day moving average, as this could potentially signal the advent of a more active bullish phase within the market. Such a development could pave the way for swift advancements towards $4.0 or even $5.5.

On a local scale, there exists a counteractive factor against this scenario in the context of higher timeframes, particularly the weekly ones. This is evident in the 50-week moving average, which has descended below the 200-week moving average. This formation is commonly known as a "death cross" and currently carries significant implications within the realm of commodity markets at these specific timeframes.

Nevertheless, it's crucial to acknowledge that the period of gas capitulation has likely already occurred, spanning between November of the preceding year and February of the current year.