Natural Gas Technical Analysis and Near-Term Outlook
This is a brief analysis for the next day or so. Our weekly Natural Gas Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key natural gas futures contracts, calendar spreads, the UNG ETF, and several electricity contracts. If you are interested in learning more, please sign up for a complimentary four-week trial.
September natural gas retains a bearish outlook and is poised to challenge the psychologically important $2.00 level and likely a confluent $1.97 objective within the next day or so. The $1.97 objective is the XC (2.764) projection of the first wave down from $3.193, the smaller than (0.618) target of the wave down from $2.302, and the equal to (1.00) target of the most recent wave down from $2.149. This is another potential stalling point given its confluence and proximity to the $2.00 level. However, any move up from $1.97 will likely be a correction without a significant and lasting bullish shift in the underlying fundamentals.
Settling below $1.97 will open the way for $1.90 and eventually the next major objective at $1.83. The $1.83 objective is the equal to target of the waves down from $2.302 and $3.570. This objective is also near the continuation chart’s recent $1.856 swing low, which was in line with the 78 percent retracement of the rise from $1.481.
Should natural gas prices rise before taking out $2.00 look for initial resistance at $2.07 and then $2.12. The $2.12 level is the smaller than target of the current wave up from $1.991. Overcoming this would call for a test of the equal to target and key near-term resistance at $2.18. The $2.18 level is also the 62 percent retracement of the decline from $2.302, so settling above this would call for a more substantial test of resistance before the move down extends.
