Natural Gas Price Forecast Archives - Page 11 of 22

The outlook for natural gas is firmly bearish and today’s nominal close below $1.60 clears the way for a test of $1.54 and possibly $1.50. These are the intermediate (1.382) and larger than (1.618) targets of the primary wave down from $1.918, respectively. The sub-waves down from $1.813 also show that these two objectives are highly confluent. Therefore, a test of resistance is expected before natural gas settles below $1.50.

Based on the wave structure and bearish sentiment, natural gas should fall to at least $1.54 before another reasonable test of resistance. Nonetheless, should prices rise sooner, look for initial resistance at $1.63 and then $1.67. The latter is expected to hold. Key near-term resistance is $1.73. Settling above $1.73 would call for a larger upward correction to $1.79 and possibly higher. This would also suggest that prices may settle into a trading range before falling to challenge major support around $1.50.

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.

Natural gas rose in an aggressive manner again today and settled above the 62 percent retracement of the decline from $2.044. This suggests prices will likely rise to challenge $2.00 and possibly higher again soon. There are no reversal patterns or setups that call for the move up to stall. However, there is a significant objective at $1.93 as the larger than (0.618) target of the only decipherable wave up from $1.521. This is also the 78 percent retracement of the decline from $2.044. Therefore, because the move up currently lacks a wave structure that can support a move above $2.00, there is a good chance natural gas will stall near $1.93. From there, a downward correction should take place before prices rise to $2.00 and higher.

The key for the move up will be holding resistance at $1.76 on a test of support. Since February, there have been two other moves up on the continuation chart to challenge resistance around or just above $2.00. Both moves, one up from $1.753 to $2.025 and then other from $1.610 to $1.998, failed on the first sign of any weakness and a test of support. Therefore, until a reasonable test of support holds it will be hard to call for a sustainable move above $2.00.

For May natural gas the key threshold is $1.76, the 38 percent retracement of the move up from $1.521. Closing below this would suggest the move up has failed again and would call for $1.67 and possibly $1.59. The latter of these is the smaller than target of the wave down from $2.044 and connects to targets well below the current $1.521 contract low.

May natural gas fell to a new contract low of $1.580 today and settled below the $1.593 larger than (1.618) target of the first wave down from $2.044. The move down is poised to extend. Based on the waves down from $1.782 and $1.731, the prompt month should reach at least $1.56 and likely $1.50. The $1.50 objective is most important. Once met, there is a good chance for another test of resistance before prices fall to the next objectives at $1.46 and lower.

Support at $1.56 may initially hold because this is the equal to (1.00) target of the wave down from $1.782. Nonetheless, should prices rise form this level before reaching $1.50 look for resistance at $1.64 to hold. Rising above this would call for $1.67 and possibly $1.71. There is nothing on the charts that calls for a move above $1.67, so overcoming this level is doubtful during the next few days. Even so, key resistance and the barrier for a bullish near-term outlook is $1.71. Settling above $1.71 would clear the way for $1.76 and higher.

The long-term outlook for natural gas remains bearish and the recent move up from $1.804 is most likely corrective. However, Tuesday’s confirmed daily bullish RSI divergence and the wave up from $1.804 call for a larger test of resistance before the decline continues.

Today, natural gas stalled just below $1.84 support and the subsequent move up most likely forms the impulse leg of the primary wave up from $1.804. The $1.88 smaller than (0.618) target of this wave has nearly been met this afternoon and the equal to (1.00) target is $1.91. Settling above $1.91 will call for key near-term resistance at $1.96, a close above which will clear the way for a larger upward correction to $2.00 and higher.

Support at $1.83 is crucial because a move below this would take out the $1.825 intra-day swing low and invalidate the wave up from $1.804 that projects to $1.91 and higher. In turn, this would shift near-term odds back in favor of $1.79 and lower.

Natural gas has adopted a much more positive near-term bias during the last week and is pushing toward key thresholds that could open the way for a longer-term bullish outlook. Today’s settle above $2.94, the upper end of the tolerance range around this week’s $2.91 target, calls for a test of $3.00. There is immediate resistance at $2.96 but $3.00 is now the next major objective. A close above this would be long-term bullish, calling for $3.10 and higher.

That said, the move up is becoming somewhat extended and a pullback to test support should take place before prices overcome $3.00. Such a move would likely be corrective and should hold $2.88 support. Key support for the near-term is $2.85, an important retracement of the move up from $2.671 and $2.74, which is also in line with the 50-day moving average. Settling below this would be a likely reflection of a negative shift in underlying fundamentals. For now, though, while $2.85 holds any move down will present a short-term buying opportunity that could become a longer-term uptrend upon a close over $3.00.

September natural gas briefly bounced after falling to $2.751, but the move up stalled at $2.788, forming a new primary wave down from $2.831 that is poised to reach at least $2.73 and possibly $2.70 tomorrow. The former is the 62 percent retracement of the move up from $2.671 and the smaller than (0.618) target of the wave down from $2.831. This level may initially hold, but once met odds will favor an eventual close below $2.73, which would then open the way for key support around $2.70. This is the equal to (1.00) target of the wave down from $2.831 and connects to $2.66 and lower.

That said, for the corrective move up from $2.671 to retain a reasonable shot at extending $2.73 needs to hold and prices will have to overcome the $2.788 intra-day swing high. This will not guarantee a move up but will increase the probability for a test of $2.85, $2.89, and possibly $2.92. For now, though, due to today’s close below yesterday’s $2.77 target, the near-term outlook is negative.

The near-term outlook for June natural gas has become much more positive. Odds favor a continued rise toward the next major objective of $2.98. However, today’s long upper shadow indicates a test of support might take place first, though this should present a buying opportunity for bulls.

Yesterday, prices finally overcame the $2.873 swing high and broke higher out of the trading range that has dominated the market since mid-February. In addition, the close above $2.90, a highly confluent and important projection for each of the major waves up from $2.55, $2.638, $2.66, and $2.695, increased odds that the move up will continue. As stated in our weekly analysis and yesterday’s daily update, the key now is to sustain a close above $2.90 and ideally hold support at $2.87 and no lower than $2.83.

Relative odds (based on the number of times a target is found within our analysis) indicate the move up should extend to at least $2.95 and likely $2.98. The latter is the next major objective because it is in line with the $2.975 swing high and is the last target protecting the psychologically important $3.00 level.

Even so, this afternoon’s pullback from $2.939 left a long upper shadow on the daily chart, warning that a test of support might take place before $2.95 is met and eventually overcome. Should prices fall below $2.90 early tomorrow, look for a test of Tuesday’s $2.87 midpoint. This level should hold.

Key support for the near-term is $2.83, Tuesday’s open and the 200-day moving average. Settling below this would be a strong indication that the move up has failed and that prices will most likely settle back into a trading range with a slightly higher ceiling.

After holding support near $2.70 last week, June natural gas rallied and overcame the $2.844 swing high. This was somewhat positive, but the move stalled just below the more important $2.873 swing high. This swing defines the top of the trading range that has contained prices since mid-February. For now, odds still slightly favor a break higher out of the range, though the pullback from yesterday’s $2.864 swing high is poised to extend to at least $2.79 and possibly $2.76 first.

Support at $2.76 is most important for the near-term and could present a buying opportunity for those that missed last week’s move up or have locked in long profits over the past few days. Even so, a close below $2.76 would shift odds back in favor of $2.71. This is the lowest that the small wave down from $2.864 projects, so this level should hold unless there is a bearish surprise from external factors (i.e. a much larger than expected build tomorrow).

Should prices overcome the $2.873 swing high the market must still settle above a highly confluent objective at $2.90 to prove a break higher out of the range isn’t a false breakout. Therefore, $2.90 is key resistance, a close above which would open the way for $2.93, $2.96, and possibly higher.

This week, June natural gas has been bound within a very tight range between nominally $2.70 and $2.77. This is a challenging call right now because there are plenty of technical factors that indicate a break in either direction could take place soon. Even so, because the corrective range formed after a move down from $2.82 odds have a slight edge to break lower. A close below $2.70 would open the way for $2.66, $2.63, and possibly lower. Should prices settle above $2.77, look for the move up to challenge at least $2.81 and possibly $2.84.

Natural Gas - 0.02 Kase Bar — Natural Gas – 0.02 Kase Bar

All of that said, even upon a break out of the most recent range prices must still contend with the boundaries of a larger range that has persisted for the past few months between approximately $2.66 and $2.87.

For now, look for a break out of the smaller range between $2.70 and $2.77 within the next day or so to guide short-term trade decisions. There is still no evidence calling for a break higher or lower out of the larger range, so its boundaries would make for likely profit taking or stop and reverse entry levels until external factors provide more evidence to help determine a longer-term trend.

June natural gas remains range bound between nominally $2.65 and $2.87 but has been working its way toward the upper end of the range for the past few days. A test of $2.84 is expected early tomorrow but this level will probably hold as there is evidence the move up is exhausted and poised for another test of $2.78 and possibly lower.

June sustained a close over $2.79, the smaller than (0.618) target of the wave up from $2.66, for the past two days. The equal to target for this wave is $2.85, which is near $2.84, the 200-day moving average. Waves that meet the smaller than target generally extend to the equal to target. Therefore, there is a good chance for at least $2.84 early tomorrow. This is extremely strong and important resistance, so a close above $2.84 would be quite positive for the near-term. However, to prove June has broken out of the recent range a close above the $2.873 swing high is necessary. For now, such a move is not expected without help from external factors (i.e. another larger than expected withdrawal from storage).

That said, today’s early move up fulfilled the $2.825 equal to (1.00) target of the wave up from $2.691 and the subsequent pullback formed a daily hanging man reversal pattern. The hanging man and confirmed bearish intra-day divergences indicate the move up is exhausted and ready for another test of $2.78. This is the hanging man’s confirmation point, a close below which would open the way for another downward oscillation within the trading range to $2.75 and lower.

So, with all factors considered look for a move up to at least $2.84 and then for a test of $2.78 again within the next day or so. Settling beyond either of these levels should paint a clearer picture of next week’s outlook.

Natural Gas Price Forecast – April 15, 2020

Category: Natural Gas Price Forecast