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.
The outlook for natural gas is bearish after the move down accelerated and confirmed Monday’s shooting star and Tuesday’s long-legged doji. The pullback from $4.901 also fell below the $4.132 swing low, took out the 20-day moving average, and confirmed daily bearish KasePO, KaseCD, RSI, and Stochastic divergences. These confirmed bearish patterns and signals call for a more substantial test of support in the coming days and warn that a bearish reversal might be underway.
Tomorrow, look for a test of the 38 percent retracement of the rise from $2.501 at $3.98. Settling below this will provide further evidence that the move down is more than a simple correction. This will also clear the way for projections of the wave formation down from $4.901 at $3.92 and $3.80. The next major target below $3.98 is the 50 percent retracement at $3.70. Falling to $3.70 will take out the last major swing low at $3.742.
There are no bullish patterns or signals that call for the move down to stall before reaching at least $3.98. Even so, should prices rally again and overcome today’s $4.23 midpoint, look for a test of key near-term resistance at $4.37. Settling above $4.37 will warn that the move down is failing and call for a push to challenge $4.49 and possibly a major threshold at $4.57 on both the April and continuation charts again.
