Bullish momentum in the Commodity Market Last Week, One Commodity Below Resistance Level – NATURAL GAS

 Global Commodity Market Wrap-Up

The metals market showed strong performance last week, with precious metals maintaining their upward momentum, while base metals also joined the rally, gaining alongside precious metals last week. Gold surged by 1.79%, reaching a new high, and silver climbed by 0.48%. Base metals followed suit, with copper rising by 1.03%, lead increasing by 1.28%, and zinc jumping by 3.00%. These movements highlight shifting investor sentiment and varying demand across sectors. After a period of stability, the market has entered a more volatile phase, suggesting that price movements will be influenced by these changing dynamics. The overall outlook remains uncertain.

Last week, natural gas prices jumped by 11.29%, fueled by supply constraints and rising seasonal demand. In contrast, crude oil prices fell by 0.44%, as market uncertainty and shifting investor sentiment weighed on the commodity. U.S. sugar prices rose by 3.97%, standing out amid mostly declining agricultural commodities. These movements highlight the ongoing impact of supply-demand imbalances, with investors adjusting strategies in response to global economic uncertainties. The energy markets are experiencing heightened volatility, while the agricultural market remains range-bound, influenced by supply disruptions and changing demand trends, suggesting continued price fluctuations.

Global commodity prices have stabilized around key support levels, influenced by a variety of global factors. Precious metals are holding above critical support zones, signalling the potential for a continued bullish trend. In the energy sector, natural gas remains volatile, trading within a wide price range, while crude oil is losing momentum from established resistance levels. Agricultural commodities are largely range-bound, affected by sector-specific conditions. This mixed environment of stability and volatility calls for a cautious approach, with investors carefully monitoring economic and geopolitical developments, balancing risks and opportunities in the evolving commodities market.

The upcoming Micro and Macroeconomic events that may impact market sentiments include an update CB Consumer Confidence, New Home Sales, Durable Goods Orders, GDP and Core PCE Price Index.

Having understood the global commodities performance over the past week, taking cues from major global economic events, and based on technical analysis, noted below is the recommendation with the generic insights, entry price, target prices, and stop-loss Natural Gas April Future (NYMEX: NGJ5) for the next 2-4 weeks duration:

Natural Gas April Future (NYMEX: NGJ5)  

Price Action and Technical Indicator Analysis: March natural gas futures are trading below key horizontal levels, with bearish candlestick patterns signalling a loss of momentum and a correction from recent highs, pointing to the potential for further downside. The decline in trading volume supports this downtrend, suggesting the rally may be coming to an end. On the daily chart, a strong resistance level reinforces the bearish outlook. The Relative Strength Index (RSI) at 64.65 shows resistance holding and a negative divergence, suggesting continued bearish pressure. Meanwhile, the 50-period simple moving average (SMA) offers support. These technical indicators indicate a likely loss of upward momentum and a possible shift to a consolidation phase.

Now the next crucial support levels appear to be at USD 3.68 and USD 3.58, and prices may test these levels in the coming periods (2-4 weeks).

As per the above-mentioned price action and technical indicators analysis, Natural Gas April Future (NYMEX: NGJ5) is looking technically well-placed for a ‘Sell’ rating. Investment decisions should be made depending on an individual’s appetite for downside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Technical summary of the ‘Sell’ recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, WASDE report, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact commodities’ prices:

Futures Contract Specifications

Disclaimers

Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within a 2-4 weeks’ time frame. This may be looked at by Individuals with sufficient risk appetite looking for returns within short investment duration. The investment recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the commodities has not been considered in the decision-making process. Other factors which could impact commodity prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: Individuals can consider exiting from the commodity if the Target Price mentioned as per the Technical Analysis has been achieved and subject to the factors discussed above.

Note 3: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the commodity. Commodity with high volumes is more liquid compared to the lesser ones. Liquidity in commodity helps in easier and faster execution of the order. 

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or Selling interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or Selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. This report is based on ~80% Stop Loss of the Target 1 from the entry point

The reference date for all price data, volumes, technical indicators, support, and resistance levels is February 24, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note: Trading decisions require a thorough analysis by individuals. Technical reports, in general, chart out metrics that may be assessed by individuals before any commodity evaluation. The above are illustrative analytical factors used for evaluating the commodity; other parameters can be looked at along with additional risks per se.