So far this year, Natural Gas is trading like a sluggish commodity in the overall energy segment. Though it’s positively correlated with Crude oil in terms of historical trends (based on intermarket relationships), extent of price swings are more volatile this time, when compared to crude oil. Just look at the price swings, isn’t it very obvious to notice highly volatile sideways market condition. Prices are trading roughly within the range between 200-180.
Price Action Reflects the Volatility and Sideways Market Condition
We can even witness multiple traps and shakeouts in Lower time frame market structure. Strong selling pressure exists around potential resistance zone. Bulls made multiple attempts to break the key resistance zone at 200 – 205, all turned out as failures.
Price action forms a minor structural support zone at 185 -186 slightly below the key resistance zone. Overall it looks like a basement phase that occurs before breakout. From Wyckoff’s point of view, it’s known as “Absorption basement”. Technically it means Bulls are willing to absorb selling pressure to push prices higher. It indicates the intention of Buyers to break from the zone, Will they succeed this time? It’s necessary to keep in mind that bulls already multiple attempts and that resulted only in failures. So traders must observe the Price action, gauge buying – selling pressure and trade accordingly.
