Natural Gas Price Forecast – January 20, 2021

Author: Dean Rogers, CMT

Dean Rogers, CMT is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer but has developed into Kase’s senior technical analyst. He writes Kase’s award-winning weekly Crude Oil, Natural Gas, and Metals Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

Natural Gas Technical Analysis and Near-Term Outlook

Natural gas fell as expected this morning and took out support around $2.51 before stalling at the $2.45 target. Taking out $2.51 was bearish for the outlook because this is the 62 percent retracement of the rise from $2.263. However, $2.51 held on a closing basis and a daily bullish hammer formed. This pattern suggests natural gas will rise to challenge resistance around $2.62 during the next couple of days and that prices might begin to consolidate into a trading range while waiting on more information from supply/demand factors (e.g., weather).

Natural Gas - $0.025 Kase Bar Chart
Natural Gas – $0.025 Kase Bar Chart

Natural gas might be hard-pressed to overcome $2.62 without a bullish shift in weather or other factors. However, closing above $2.62 will call for $2.67 and possibly $2.73. Settling above $2.73 would reflect a renewed bullish shift in sentiment and call for $2.85, the barrier to a firm bullish outlook.

With that said, a one day move up and unconfirmed hammer pattern is not enough to definitively call for the recent move down to end. Yesterday’s gap down and decline below the $2.589 swing low was a clear bearish shift in recent sentiment. Taking out $2.50 will call for another test of $2.45, a close below which will clear the way for a continued decline.

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.

WTI Crude Oil Technical Analysis and Short-Term Forecast

WTI crude oil initially fell today but stalled at $51.81 before rising to $53.18 where the 62 percent retracement of the decline from $53.94 was challenged. Even so, this level and Friday’s midpoint held on a closing basis. Also, Friday’s bearish engulfing line and the double top around $53.9 are still intact. Therefore, odds continue to lean in favor of a deeper test of support before the move up continues. Closing below $52.3 will confirm the double top and clear the way for WTI to fall toward the pattern’s $50.6 target in the coming days.

WTI Crude Oil - $0.35 Kase Bar Chart
WTI Crude Oil – $0.35 Kase Bar Chart

Nevertheless, WTI’s uptrend has been resilient in recent weeks. Any recent attempt at a significant test of support has been quickly negated and any reversal patterns have been wiped out shortly after forming. Today’s move up suggests this might be another case in which overly bullish sentiment will win out over bearish fundamental and technical factors. Should WTI overcome $53.13 early tomorrow look for another attempt at $53.9. Closing above $53.9 will wipe out the double top and bearish engulfing line and clear the way for at least $54.5 and probably higher before another attempt at a significant pullback.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gold Technical Analysis and Near-Term Outlook

The longer-term outlook for gold is bearish once again after the pullback from $1962.5 accelerated and took out the smaller than (0.618) target of the wave down from $1973.3 and the 62 percent retracement of the rise from $1767.2. The subsequent move up from $1817.1 has been shallow and choppy and is most likely corrective. Moreover, today’s decline to $1826.6 wiped out most of the intra-day waves that had formed during the move up from $1817.1.

Near-term odds also favor a continued decline. A move below $1835 will call for $1820 and $1808. Settling below $1808 will clear the way for $1789 and lower.

Gold - $15 Kase Bar Chart
Gold – $15 Kase Bar Chart

Nevertheless, the move up from today’s $1826.6 low met the smaller than target of the newly formed primary wave up from $1817.1. Therefore, this wave has a reasonable chance of rising to challenge its $1873 equal to (1.00) target before the decline continues. Rising above $1856 early tomorrow will increase odds for a test of $1873. This is also the 38 percent retracement of the decline from $1962.5 and is expected to hold. Closing above $1873 would call for a larger test of resistance before the decline continues.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ratio, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial

Natural Gas Technical Analysis and Near-Term Outlook

The outlook for natural gas in the coming weeks is bullish after breaking higher out of a broadening wedge and meeting the $2.90 smaller than (0.618) target of the primary wave up from $2.263. This wave now favors an eventual rise above the crucial and psychologically important $3.00 level to reach its $3.10 equal to (1.00) target.

However, the 50-day moving average held on a closing basis again and the decline from $2.899 has formed two sequential daily shooting stars. The wave formation is also poised to test $2.66 before the move up continues. Therefore, the near-term outlook leans bearish.

Natural Gas - $0.025 Kase Bar Chart
Natural Gas – $0.025 Kase Bar Chart

The move down is most likely a corrective throwback to test the upper trend line of the broadening wedge, which is in line with $2.66. This is also the 38 percent retracement of the rise from $2.263. Therefore, $2.66 is expected to hold. Closing below this will dampen odds for a continued rise and call for $2.58 and then a test of key support and the barrier to a renewed bearish outlook at $2.52.

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.

WTI Crude Oil Technical Analysis and Short-Term Forecast

WTI crude oil rallied again today and negated the hanging man and bearish momentum signals that formed Monday. The daily KasePO and RSI momentum oscillators are overbought, the KaseCD and MACD are setup for bearish divergence, and the wave structure is due for a test of support after overcoming the $52.1 equal to (1.00) target of the primary wave up from $27.22. However, the challenge is that each time bearish patterns or signals form WTI rises and wipes out the negative technical factors. The rate at which prices are rising is unsustainable and a significant test of support is expected soon. However, as of this afternoon, there are no bearish patterns or signals that call for the move up to stall, so the near-term outlook remains bullish.

WTI Crude Oil - Daily Chart
WTI Crude Oil – Daily Chart

The $53.5 target is the most confluent objective and the next logical stalling point based on the waves and subwaves up from $34.50. Most importantly, this is the intermediate (1.382) target of the primary wave up from $34.50. Upon a close above $53.5, the next probable stalling point is the $55.4 larger than (1.618) target.

As stated, there are no bearish patterns or signals as of this afternoon that call for the move up to stall tomorrow. Nevertheless, caution is warranted due to the overbought state of the daily RSI and KasePO. Should WTI take out $52.7 look for a test of key near-term support at $52.1. Settling below $52.1 will open the way for a deeper test of support during the next few days with thresholds at $51.6 and $50.9.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gold Technical Analysis and Near-Term Outlook

Gold has begun to take on a more positive long-term outlook during the past few weeks. The primary wave up from $1767.2 is still poised to eventually challenge a bullish decision point at $1974. However, the move up stalled at $1962.5, and the subsequent pullback to $1902.6 completed a daily bearish evening star and KaseCD momentum divergence signal. Therefore, the near-term outlook is bearish and a close below the 100-day moving average around $1906 will clear the way for $1891 and possibly $1867 during the next few days. Settling below $1867 is currently doubtful but would call for a bearish decision point at $1838 to be challenged. Closing below this would strongly suggest that the move up has failed and that the larger-scale decline from $2099.2 will continue.

Gold - $10 Kase Bar Chart
Gold – $10 Kase Bar Chart

With that said, trading was quite choppy today and held the 100-day moving average for the second straight day. Should gold overcome $1935, yesterday’s midpoint and the 62 percent retracement of the decline from $1962.5, look for a test of key near-term resistance at $1955. Settling above this would reaffirm a positive near-term outlook and call for a test of the $1974 bullish decision point.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ratio, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

Natural Gas Technical Analysis and Near-Term Outlook

The outlook for natural gas is bullish after challenging a crucial target around $2.74 today. Nevertheless, this objective and the $2.775 swing high held on a closing basis. Therefore, $2.74 is still a factor for the near-term. Closing above this and overcoming the $2.775 swing high will confirm a winter bottom has been made and clear the way for a push toward the next major objective and a long-term bullish decision point at $3.00.

Natural Gas - $0.035 Kase Bar Chart
Natural Gas – $0.035 Kase Bar Chart

Nevertheless, the wave formation up from $2.263 is due for a test of support before rising much higher. Moreover, today’s high wave candlestick (long upper and lower shadows) reflects uncertainty. Therefore, there is a reasonable chance for a test of $2.663 and possibly $2.58 before natural gas settles above $2.74 and overcomes the $2.775 swing high. Support at $2.58 is expected to hold. Closing below this will call for a deeper test of support where $2.46 is the barrier to a renewed bearish 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.

WTI Crude Oil Technical Analysis and Short-Term Forecast

WTI crude oil shook off yesterday’s decline with ease, reflecting a bullish shift in external factors. Although $50.0 held on a closing basis, the close above the highly confluent $49.6 objective clears the way for $51.0 and $52.1 during the next few days. Both are confluent wave projections but $52.1 is most important because it is the equal to (1.00) target of the primary wave up from the February contract low of $27.22.

With that said, the wave formation up from $34.50 is due for a correction and daily momentum oscillators are either overbought or setup for bearish divergence. Therefore, a significant test of support is expected once $52.1 is met, and before this objective is overcome on a sustained closing basis.

WTI Crude Oil - $0.35 Kase Bar Chart
WTI Crude Oil – $0.35 Kase Bar Chart

Nevertheless, as the move up extends toward $52.1 in the coming days, support at $49.1 will likely hold and $48.3 is key for the near-term. Settling below $48.3, which is near today’s open and in line with the 62 percent retracement of the rise from $47.18, would shift near-term odds in favor of $47.8 and possibly $47.2. Closing below $47.2 would call for the move down to take out the $47.18 swing low and signal that a significant test of support is finally underway.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gold Technical Analysis and Near-Term Outlook

Gold challenged crucial resistance around $1894 and settled above the 50-day moving average today. This is quite bullish for the outlook because $1894 is the 62 percent retracement of the decline from $1973.3, the 38 percent retracement from $2099.2, and, most importantly, the smaller than (0.618) target of the primary wave up from $1767.2. Most waves that meet the smaller than target rise to fulfill at least the equal to (1.00) target, in this case, $1930. Consequently, due to the confluence and importance of $1894, a sustained close above this objective would be a firm warning that the move down from $2099.2 might be complete and suggest that a longer-term bullish outlook is being readopted.

Gold - $10 Kase Bar Chart
Gold – $10 Kase Bar Chart

With that said, because $1894.0 held on a closing basis there is a reasonable chance for a corrective pullback to $1872 and possibly $1852 first. Support at $1852 is expected to hold. Closing below this will call for a test of key near-term support at $1833. This threshold is in line with the 50 percent retracement of the rise from $1767.2 and the 200-day moving average. Closing below $1833 would call for a move below the $1820.0 swing low. This would invalidate the wave up from $1767.2 that makes the connection from $1894 to $1930 and higher and confirm that the move up has failed.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ratio, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial

Natural Gas Technical Analysis and Near-Term Outlook

Natural gas formed another hanging man pattern today. As discussed yesterday, this would normally dampen odds for a larger test of resistance. However, the intra-day wave formation up from $2.368 looks to be unfolding as a five-wave pattern, and the move up from $2.596 is likely Wave V, which targets $2.80. This is the XC (2.764) projection of Wave I, the smaller than (0.618) target of Wave III, and the larger than (1.618) target of Wave 1/V. The connection to $2.80 is made through $2.72 and then $2.76.

Natural Gas - $0.035 Kase Bar Chart
Natural Gas – $0.035 Kase Bar Chart

Once $2.80 is met, a significant three-wave test of support is anticipated. An eventual close above $2.80 would call for the move up to unfold as a larger five-wave pattern (or at least a nested three-wave pattern) that targets $2.93 and higher.

With that said, the hanging man patterns warn that the move up might be a simple three-wave correction of the decline from $3.507 that is stalling around $2.70. Should natural gas take out the $2.618 swing low look for a test of $2.58. This is the 38 percent retracement of the rise from $2.368 and is a level that must hold for the move up to continue to unfold as a five-wave pattern as expected. Settling below $2.58 would call for a test of key support at $2.50, a close below which would confirm the corrective move up is over and would shift odds back in favor of a continued decline.

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.