Natural Gas Technical Analysis and Near-Term Outlook
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July natural gas’ move down from $3.161 accelerated again today and settled below the 38 percent retracement of the rise from $2.128. This implies that the move down is more than just a simple profit-taking correction. A more significant test of support is now favored.
Tomorrow, look for a test of the 50 percent retracement and a confluent wave projection target around $2.64. Settling below this will call for a test of the $2.56 XC (2.764) projection of the largest wave down from $3.161. This is a potential stalling point. However, the waves down from $3.096 and $2.853 suggest that upon a close below $2.64 the move down could challenge $2.52 and $2.49 in the coming days. Settling below $2.52, which is also the 62 percent retracement of the rise from $2.128, is doubtful but would reflect a bearish shift in sentiment for the coming weeks.
The significance of the move down from $3.161 during the past few days suggests that the move up was overextended. There is little doubt that a long-term bottom has been made, so it now looks as though natural gas is looking to settle into a new trading range. Based on historical evidence, this range will most likely be between $2.50 and $3.00.
