Natural Gas Price Analysis: XNG/USD corrects from one-month peak, holds above $2.50
- Natural Gas price drifts lower on Tuesday and snaps a six-day winning streak to a one-month top.
- The recent breakout through key hurdles favours bulls and supports prospects for further gains.
- A convincing break back below the $2.50 area is needed to negate the near-term positive outlook.
Natural Gas price edges lower during the Asian session on Tuesday and reverses a part of the previous day's positive move to the $2.765 area, or a one-month top. The XNG/USD currently trades around the $2.725 region, down nearly 0.75% for the day and for now, seems to have snapped a six-day winning streak, though any meaningful corrective decline still seems elusive.
The Relative Strength Index (RSI) on the daily chart is hovering around the 70 mark and turning out to be a key factor that prompts some profit-taking around the XNG/USD. That said, last week's sustained move beyond the $2.50 congestion zone and the overnight breakout through a descending trend line extending from March swing high favours bullish traders. This, in turn, suggests that the path of least resistance for Natural Gas price is to the upside and supports prospects for the emergence of some dip-buying at lower levels.
The aforementioned descending trend-line resistance breakpoint, currently around the $2.70 area, now seems to protect the immediate downside ahead of the $2.65 zone, or the overnight swing low. Any further decline might still be seen as a buying opportunity, which should help limit the downside for the XNG/USD near the $2.50 horizontal resistance breakpoint. The latter should act as a pivotal point, which if broken decisively might shift the near-term bias in favour of bearish traders and prompt aggressive technical selling.
On the flip side, the overnight swing high, around the $2.765 area, closely followed by the $2.815 region, or the May monthly top, now seem to act as immediate hurdles. Some follow-through buying will reaffirm the positive outlook and lift the XNG/USD beyond an intermediate barrier near $2.915, towards reclaiming the $3.000 round figure. The momentum could get extended further and eventually lift Natural Gas price to the March swing high, around the $3.075-$3.080 zone.
