Natural Gas Technical Analysis and Near-Term Outlook
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September natural gas continues to show signs of a bullish recovery. A weekly bullish KCDpeak (oversold signal) and weekly bullish KasePO, RSI, and MACD divergences suggest a bottom has been made. The 10-day DMI and daily Kase Trend indicators are also bullish. Furthermore, today’s move up shook off a series of bearish daily candlesticks that had formed during the past several days.
The move up is struggling to settle above the 89 percent retracement from $2.302 and equal to (1.00) target of the subwave up from $1.882 at $2.27. However, today’s rise has put natural gas in a position to re-challenge and overcome $2.27 within the next day or so. Closing above $2.27 will call for a minor target at $2.33 and then a test of the next major objective at $2.37. The $2.37 objective is in line with the intermediate (1.382) target of the subwave up from $1.882, the smaller than (0.618) target of the primary wave up from $1.882, and the 38 percent retracement of the decline from $3.193. Settling above $2.37 for a few days will provide more evidence that a sustainable bullish reversal is underway.
That said, natural gas bulls are not completely out of the woods yet. The resilience of $2.27 resistance and late pullback from $2.276 warns that another test of support might take place. Taking out $2.16 will call for a test of key near-term support at $2.13. This is the 38 percent retracement of the rise from $1.882. The $2.13 level is also in line with the $2.134 corrective swing low of the primary wave up from $1.882 which projects to $2.37 and higher. Closing below $2.13 will not confirm that the move up has failed but would call for $2.08 and then a test of a bearish decision point at $2.02.
