Special Report: Natural Gas

Overview

Natural Gas – The Next Move

Over the past two weeks, natural gas has developed two strong technical setups pointing in opposite directions. One suggests the potential for a larger rebound, while the other supports continuation of the broader downtrend that has been in place since late 2025.

The bullish setup came from the strong bullish engulfing candle formed after the April selloff. The decline leading into that reversal occurred on weakening momentum, creating a bullish divergence from deeply oversold conditions. That combination typically signals selling pressure is beginning to fade and can often lead to a meaningful bounce.

At the same time, a bearish hidden divergence has developed on the recent recovery off the April 30 low. Hidden divergence occurs during a downtrend when momentum pushes to a new high, but price fails to confirm with a new high of its own. That is the structure currently developing in natural gas and keeps the broader bearish trend intact unless resistance levels are decisively broken.

The other major factor is volatility compression. Bollinger Band width has tightened to levels not seen since early December, signaling a significant contraction in volatility. Historically, periods of this type of compression are often followed by an expansion in volatility and a larger directional move.

The last time volatility compressed to similar levels in December, natural gas initially broke higher before reversing sharply lower, eventually falling roughly 31% from 4.24 down to 2.94.

Right now, the market appears coiled between competing technical signals and historically low volatility. The longer this range holds, the more significant the eventual breakout is likely to be.

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Disclaimer

This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.

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