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.
January natural gas fell to challenge the 78 percent retracement of the rise from $2.800 at $2.99 and the psychologically important $3.00 level today. The move down stalled at $2.977 and prices rose to form a daily hammer. This candlestick pattern warns that a test of Tuesday’s $3.12 midpoint might occur before the move down extends.
However, a larger move up from $2.977 will likely be a correction because Tuesday’s decline settled below the 62 percent retracement of the rise from $2.800 and the smaller than (0.618) target of the wave down from $3.656. This wave favors a test of its $2.79 equal to (1.00) target. Settling below $2.99 will call for $2.93 and $2.84, which then make a connection to $2.79.
That said, should natural gas overcome $3.12 look for a test of key near-term resistance at $3.22. This is in line with the 38 percent retracement of the decline from $3.639 and the confirmation point of today’s hammer. Settling above $3.22 and confirming the hammer will shift the near-term odds in favor of testing $3.31 and possibly the 62 percent retracement from $3.639 at $3.39 in the coming days.
