Natural Gas (XNG/USD) – Critical Decision Point

NATURALGAS, 4H
Mad-Hatter
Mar 2, 2025

Natural Gas is testing a key support at $3.8250, a level that has provided a base for multiple rallies in the past. However, with bearish fundamental pressure mounting, we may see a breakdown that could accelerate the downside move.

Probability Breakdown & Market Bias
Bearish Breakdown (Below $3.8250). 70%
Bullish Bounce (Holding $3.8250 & reclaiming $3.90-$4.00). 30%

Why the Bearish Bias?

Weather Forecasts Lean Bearish – Warmer-than-expected temperatures in Europe are reducing heating demand, limiting upside potential for Nat Gas prices.
Technical Weakness – Price has been trending downward, forming lower highs since peaking near $4.30. Failure to reclaim $3.90-$4.00 would confirm weakness.
Market Sentiment Shifting Bearish – LNG supply remains stable, and demand isn't spiking as expected. If $3.8250 gives way, sellers will step in aggressively.

Scenario 1: Bearish Breakdown (Most Likely - 70%)
If $3.8250 breaks, expect a sharp decline toward $3.60 - $3.50.

Trade Plan (Short Position)

Entry: Below $3.80 (confirmed breakdown)
Stop Loss: Above $3.85 (to avoid whipsaws)
Target 1: $3.60
Target 2: $3.50
A strong 4H close below $3.80 will confirm the bearish move.

Scenario 2: Bullish Reversal (Less Likely - 30%)
If $3.8250 holds and buyers step in, price could rally toward $3.95 - $4.10.

Trade Plan (Long Position)

Entry: $3.83 - $3.85 (after a clear rejection wick)
Stop Loss: Below $3.75
Target 1: $3.95
Target 2: $4.10
Look for high volume rejection around $3.8250 before entering long.


Final Analysis & Market Outlook
Bias: Leaning Bearish (70% probability of breakdown)
Invalidation: If price holds $3.8250 and reclaims $3.90+, bias flips bullish
Key Catalyst: If Europe remains warmer, expect downside pressure to persist

The higher-probability trade is to short on a confirmed break of $3.80. If the level holds, a long is possible, but the overall structure remains weak. Watch for confirmation before taking action.