Trading Natural Gas with Pivot Points and RSI
- Timothy Beggans
- Jul 1
- 2 min read
In 2025, natural gas volatility—driven by LNG exports, weather, and EIA storage reports—demands robust strategies. Combining Pivot Points with RSI offers structure for trading this dynamic market.
Pivot Points Explained
The pivot point (PP) uses the prior day’s data:
PP = (High + Low + Close) / 3
R1 = (2 × PP) - Low
R2 = PP + (High - Low)
S1 = (2 × PP) - High
S2 = PP - (High - Low)
Example (NYMEX futures): High = $3.50/MMBtu, Low = $3.20/MMBtu, Close = $3.40/MMBtu:
PP = $3.37, R1 = $3.54, R2 = $3.67, S1 = $3.24, S2 = $3.07
These levels define support/resistance for entries, exits, and stops.
Strategy in Action
Bullish: Price above PP—buy near PP/S1, target R1/R2.
Bearish: Price below PP—short near PP/R1, aim for S1/S2.
Fundamentals: EIA reports (Thursdays, 10:30 AM ET) or weather forecasts confirm signals.
Risk: Stops beyond support/resistance (e.g., below S2 for longs).
Enhancing with RSI (0–100)
Overbought: RSI > 70; Oversold: RSI < 30.
Bullish: Price above PP, RSI 50–70.
Bearish: Price below PP, RSI 30–50.
Divergences: RSI higher lows at S1/S2 (bullish); lower highs at R1/R2 (bearish).
Range-bound: Buy S1 with RSI < 30; short R1 with RSI > 70.
Example Trade
Post-bullish EIA report, price opens at $3.40 (above PP: $3.37), RSI at 65. Buy at PP, stop below S1 ($3.24), target R2 ($3.67). Exit if RSI hits 75 or shows bearish divergence near R2.
Best Practices
Align with fundamentals.
Use daily pivots, 1-hour RSI.
Risk 1–2% per trade.
Backtest strategies.
Stay disciplined.
Conclusion
Pivot Points and RSI sharpen natural gas trading by combining structure and momentum. Integrate with fundamentals for precise entries/exits in this fast-moving market.
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