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 in the coming weeks is bullish after settling above a crucial $3.08 resistance level on Tuesday. However, a double top has formed at $3.16 and today’s pullback shaped a daily bearish dark cloud cover candlestick reversal pattern. The $2.99 confirmation point of the dark cloud cover held, so the move down from $3.159 might be another short-lived correction. Nevertheless, the double top and dark cloud cover indicate a deeper test of support will probably take place during the next day or so before the move up extends.

Tomorrow, look for a test of $2.99, a move below which will call for $2.91. A simple correction should hold $2.91 because this is the larger than (1.618) target of the wave down from $3.159 and 38 percent retracement of the rise from $2.518. Settling below $2.91 would call for an extended correction to challenge $2.84 and possibly a key objective at $2.76.

That said, should prices rally back above $3.09 look for a test of $3.18. Settling above $3.18 would negate the $3.16 double top and today’s dark cloud cover. This would shift the near-term odds back in favor of natural gas rising to $3.23 and higher in the coming days.

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.

Natural gas may be consolidating into a range after testing and holding major support at $2.52 late last week. Prices have aggressively swung higher and lower for the past few days. These swings reflect near-term uncertainty. Thus the likelihood of a period of consolidation as traders await more information to definitively push prices higher or lower.

Nevertheless, today’s move up fulfilled the $2.77 smaller than (0.618) target of the wave up from $2.518. This level is also the 38 percent retracement of the decline from $3.161. The $2.77 level held on a closing basis, but most waves that meet the smaller than target extend to fulfill at least the equal to (1.00) target, in this case, $2.88. Therefore, during the next day or so odds favor a move above the 50 percent retracement of the decline from $3.161 at $2.84 to test at least $2.88.

That said, so far this week, each day that prices have been poised to rise or fall a move in the opposite direction has taken place the next day. Therefore, caution is warranted. Should prices fall again and take out $2.69 look for a test of the $2.63 smaller than target of the wave down from $2.829. Settling below this will put the near-term odds in favor of testing $2.59 and likely the $2.52 level again.

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.

July natural gas’ move down from $3.161 accelerated again today and settled below the 38 percent retracement of the rise from $2.128. This implies that the move down is more than just a simple profit-taking correction. A more significant test of support is now favored.

Tomorrow, look for a test of the 50 percent retracement and a confluent wave projection target around $2.64. Settling below this will call for a test of the $2.56 XC (2.764) projection of the largest wave down from $3.161. This is a potential stalling point. However, the waves down from $3.096 and $2.853 suggest that upon a close below $2.64 the move down could challenge $2.52 and $2.49 in the coming days. Settling below $2.52, which is also the 62 percent retracement of the rise from $2.128, is doubtful but would reflect a bearish shift in sentiment for the coming weeks.

The significance of the move down from $3.161 during the past few days suggests that the move up was overextended. There is little doubt that a long-term bottom has been made, so it now looks as though natural gas is looking to settle into a new trading range. Based on historical evidence, this range will most likely be between $2.50 and $3.00.

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.

Natural gas initially fell as called for in Tuesday’s update but held the equal to (1.00) target of the wave down from $2.798 before prices rallied again. The move up has been relentless for the past few weeks and is rising at an unsustainable rate. Furthermore, the wave formation up from $1.907 is overextended, daily momentum oscillators are overbought, and the move up is due for a correction.

The challenge is that there are no bearish patterns or confirmed signals that call for the move up to stall. Therefore, the near-term outlook remains bullish. Tomorrow, look for a test of the 62 percent retracement of the decline from $3.446 at $2.86. This is a point from which a correction should take place. Closing above $2.86 will call for $2.92 and another potential stalling point at $2.97, which is the 21 percent retracement of the decline from the $6.947 contract high.

That said, today’s $2.851 high might have been enough to fulfill the $2.86 objective, so caution is warranted. Prices pulled back from the $2.851 swing high late in the day and may test today’s $2.75 midpoint. Falling below this will call for a test of key near-term support and today’s open at $2.67. Settling below $2.67 would put near-term odds in favor of a more substantial test of support in the coming days where $2.49 is most important.

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.

June natural gas continued to rise as called for today. The move up negated Tuesday’s bearish Harami and tested the XC (2.764) projection of the subwave up from $1.907. Most importantly, prices settled above the $2.380 target of a rectangle that broke higher on May 6 and the last major swing high at $2.392. The move up is now poised to challenge targets around the psychologically and historically important $2.50 level in the coming days. Closing above the $2.43 smaller than (0.618) target of the wave up from $2.214 will clear the way for $2.48, $2.52, and eventually a test of the $2.55 XC (2.764) projection of the primary wave up from $1.907.

That said, the daily Stochastic is overbought and the daily RSI and KasePO are nearing overbought territory. No bearish patterns or confirmed signals call for a reversal, but these factors warn that a test of support might take place soon. Moreover, there is a small wave down from $2.423 that projects to $2.39 at the smaller than target. Falling below this will call for a test of $2.36 and possibly key near-term support at $2.32. Settling below $2.32 would not mean that the move up has failed but would put the near-term odds in favor of a deeper test of support where $2.23 is the next most important threshold.

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.

June natural gas tested and held the lower threshold of a trading range between $1.91 and $2.14 again today. A rectangle pattern has formed, and prices are poised to break lower out of the pattern based upon today’s decline to $1.913. Wave projections at $1.92 have held on a closing basis, but prices settled below the smaller than (0.618) target of the most recent wave down from $2.14 today. This wave calls for a test of its $1.86 equal to (1.00) target. Closing below this will confirm a break lower and open the way for tests of confluent objectives at $1.84 and $1.78 in the coming days.

Nevertheless, this is still a somewhat tight call because holding the lower threshold of the rectangle warns that there is a reasonable chance for another test of resistance within the pattern. Should prices rise above $1.98 look for a test of key near-term resistance at $2.03. Closing above this would shift the near-term odds in favor of natural gas rising to challenge $2.10 and possibly the upper threshold of the rectangle at $2.14 again.

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.

June natural gas has been trading in a range between approximately $1.92 and $2.14 since mid-March. Prices tried to break higher out of the range on Tuesday but held the $2.14 equal to (1.00) target of the prior primary wave up from $1.907. Today’s pullback from $2.140 took out the smaller than (0.618) target of the wave down from $2.148 and the 62 percent retracement of the rise from $1.907. This was bearish for the outlook and calls for another test of the crucial $1.92 objective. Settling below $1.92 will call for a test of a minor target at $1.88 and then the next major objectives at $1.84 and $1.78 in the coming days.

Given the aggressive nature of today’s move down there is little technical evidence to call for the move down to stall before testing at least $1.92. However, should $1.92 continue to hold prices will likely continue to consolidate in the trading range. Should prices rise and overcome $2.03 look for a test of $2.07 and possibly key resistance and the smaller than (0.618) target of the new wave up from $1.907 at $2.11.

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.

Natural gas tested the $1.66 smaller than (0.618) target of the wave down from $2.152 again today. This target continues to hold on a closing basis, and there is now a small double bottom that has formed around this key objective. Even so, meeting the $1.66 objective is bearish for the outlook because most waves that fulfill their smaller than target eventually extend to the equal to (1.00) target, in this case, $1.48. Therefore, the outlook continues to lean bearish for the coming days. Closing below $1.66 will call for a highly confluent and important target at $1.62 that then connects to $1.58 and lower.

Nevertheless, this is still an area in which the move down may stall. Should prices rise above $1.74 look for a test of the $1.76 smaller than target of the wave up from $1.649. Settling above $1.76 would call for a test of $1.82, a close above which will confirm the double bottom and put the odds in favor of a more substantial test of resistance instead.

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.

Natural gas rose above the $1.92 target as expected today but stalled at $1.943 before it could reach the $1.95 smaller than (0.618) target of the wave up from $1.746. The move up is still poised to extend because the primary wave up from $1.686 still favors a test of its $1.97 equal to (1.00) target. Furthermore, all prior swing lows that formed during the move up from $1.686 have held so far. Overcoming the $1.93 smaller than target of the most recent wave up from $1.843 will call for a test of $1.95 and likely $1.97.

With that said, the move up has begun to show signs of weakness. Pseudo daily shooting stars that formed Tuesday and Wednesday along with the pullback from $1.943 suggest a test of $1.85 might take place first. This is the 38 percent retracement of the rise from $1.686. A normal correction will hold $1.85. Falling below $1.85 will warn that the move up is failing and call for an extended test of support where $1.78, the 62 percent retracement, is key. Settling below this would shift near-term odds in favor of a continued decline or at least a period of consolidation before prices try to rise again.

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.

May natural gas fell to a new contract low and finally settled below an important target at $1.76. The move down is now poised to test the $1.69 equal to (1.00) target of the primary wave down from $1.900 and then the $1.66 smaller than (0.618) target of the wave down from $2.152. There is a lot of support around $1.66, so this is a potential stalling point for the May contract. Nevertheless, closing below $1.66 will call for $1.63, $1.60, and eventually a test of the $1.51 equal to target of the wave down from $2.152.

There are no bullish patterns or signals that call for the move down to stall before reaching at least $1.69 and likely $1.66. Today’s decline also negated a daily weak bullish KasePO divergence. Nevertheless, should natural gas rally tomorrow look for initial resistance at $1.75 and key near-term resistance at $1.79. Settling above $1.79 would shift near-term odds in favor of a more significant test of resistance where $1.88 is most important.