Natural Gas Technical Analysis and Near-Term Outlook
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May natural gas initially fell below the crucial $3.40 equal to (1.00) target of the primary wave down from $4.946. The move down stalled at $3.336, which was just above the $3.31 larger than (1.618) target of the wave down from $4.322 and the XC (2.764) projection of the wave down from $4.253. The subsequent move up recaptured the 100-day moving average, settled above Tuesday’s open, and confirmed daily bullish MACD and Stochastic divergences. Therefore, a bullish reversal might be underway.
The intra-day wave formation up from $3.336 calls for a test of $3.89. This is the highest that the first wave up from $3.336 projects and is in line with the 62 percent retracement of the decline from $4.253. Overcoming this will call for the 38 percent retracement of the decline from $4.946 at $3.95 to be tested. Settling above $3.95 will imply that the move up is more than just a simple correction, clearing the way for $4.05 and possibly $4.15 to be challenged in the coming days.
Nevertheless, Monday’s open held on a closing basis and the wave formation up from $3.336 is due for a correction before overcoming $3.89. Should prices turn lower early tomorrow look for initial support at $3.64 and then $3.52. The $3.52 level is expected to hold. Falling below this would call for another attempt to settle below key support at $3.40.
