Natural gas futures (February delivery) have been in the red almost every single day since mid-December, having almost snapped the 2022 ascent to chart a new low of 3.88 on Tuesday.
The price is currently trading 60% below the August peak of 9.95, but hopes for an upside reversal are now gaining strength as the market is nearing its 2022 base of 3.85-3.48 and the RSI and the stochastics are fluctuating within the oversold territory.
If the bears stay in power, squeezing the market below that threshold, selling tendencies may intensify towards the 3.20-3.00 zone, where the price pivoted a couple of times during 2021. Even lower, some congestion could emerge near the 2.70 handle.
Should the price bounce on 2022 lows, the bulls will initially push for a close above the nearby 4.30 border and then attempt to pierce through the broken support trendline from 2020 lows at 4.77. If they succeed, the recovery could pick up steam towards the 2022 key support area of 5.30, where the 20-day simple moving average (SMA) currently lies. Another victory at this point could trigger a sharp increase to 6.00.
In brief, although the bearish trajectory in natural gas futures remains well intact, some recovery cannot be ruled out as the decline looks overdone near the 2022 bottom area.
