The charts indicate a long-term turnaround underway in natural gas. Here’s a stock to play it

Natural gas futures have cleared their 200-day moving average and appear to have entered a long-term basing process. Given the potential for a long-term turnaround phase in natural gas prices, we were drawn to the energy sector as a source of potential long-term stock opportunities. The current relief rally in natural gas unfolded after a successful test of long-term support from the 2016 low, near $1.60/MMBtu, and it is associated with positive divergences in long-term indicators like the monthly MACD and stochastic oscillator. This suggests that the current up-move may be the start of a more lasting turnaround. The rally in natural gas has the support of improved intermediate-term momentum, reflected in a recent positive shift in the weekly MACD, which should allow overbought conditions to be absorbed without a major correction in the coming weeks. With the 40-week moving average having been cleared, there is room to resistance from the weekly cloud model (shaded area on the chart), near $3.00/MMBtu. Interestingly, the cloud becomes thinner in July, which theoretically makes a breakout more likely. Secondary resistance for natural gas comes from a Fibonacci retracement level near $3.50/MMBtu. How to play it One of the natural gas-related stocks that sets up well from a technical perspective is Cheniere Energy (LNG) , which is a provider of liquified natural gas. The stock has a weekly MACD ‘buy’ signal near trendline support of approximately $155, and it has room to overbought territory. This supports intermediate-term upside follow-through for LNG toward well-defined resistance from 2022 and 2023, near $182. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . 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