Natural Gas Short-Term Forecast – March 28, 2018

The long-term outlook for natural gas is negative but the May contract met and held support around its $2.60 swing low Monday. The subsequent move up is most likely corrective of a longer-term decline to challenge $2.55 and lower. Even so, there is some technical evidence that the move up could still extend to at least $2.75 before another test of $2.60 and lower takes place.

The upward correction from the $2.61 swing low stalled at $2.731 today before pulling back to $2.69. The pullback forms an intra-day bullish pennant, so there is still a good chance the upward correction will extend. However, prices will have to break higher out of the pennant tomorrow and settle above $2.75 soon if the move up is going to challenge $2.82 and eventually key resistance at $2.86.

May Natural Gas - Daily
May Natural Gas – Daily

A move below $2.67 early tomorrow would be a likely sign that the pennant has failed and that the move down will challenge the $2.60 swing low again. A close below this would call for key lower support at $2.55, which is the last level protecting the continuation chart’s $2.522 swing low.

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.

WTI crude oil stalled near crucial resistance at $66.4 Monday and confirmed an intra-day bearish KaseCD divergence. The subsequent pullback completed a bearish Harami line and star today by closing below Friday’s $65.08 midpoint. The pullback is most likely corrective but should test the Harami line and star’s confirmation point near $64.2 tomorrow. A close below this would call for a larger downward correction toward key near-term support at $62.5.

May WTI Crude Oil - 0.50 Kase Bar
May WTI Crude Oil – 0.50 Kase Bar

Tomorrow, look for initial resistance at $65.3 and then $65.8. The $65.8 level is expected to hold, though the near-term outlook would only become bullish again upon a close above $66.4. This is still a crucial resistance level for the wave structure up from $57.6 that connects to $67.1 and then the next major objective protecting the $70.0 level.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Last week, April natural gas broke below the lower trend line of the upward sloping channel it had been oscillating within since February 12. Prices also settled below important support at $2.66. The move down hesitated yesterday, but resistance at $2.71 held this morning and prices fell below the $2.64 swing low today. All of this indicates that the outlook for natural gas remains negative and that major support in the mid-to-low $2.50s should be tested again soon.

Technical factors call for at least $2.62 and likely $2.59 tomorrow. There is trend line support around $2.62, and $2.59 is a confluent wave projection. Otherwise, there are no patterns or signals that indicate the move down will stall. A close below $2.59 would open the way for major support at $2.55. This is the last level protecting the continuation chart’s $2.522 swing low, a close below which would call for a much more bearish long-term outlook.

April Natural Gas - Daily
April Natural Gas – Daily

Should prices turn higher, the move up will most likely be corrective and should hold the $2.71 intra-day swing high. Key resistance for the near-term is $2.74. A sustained close above this would not doom the move down but would call for a larger upward correction before the decline continues.

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 WTI crude oil fulfilled a highly confluent and extremely important target at $64.0 today when price rose to $63.98. The move up comes after prices broke higher out of the bullish descending flat wedge Friday and then tested and held the pattern’s upper trend line Monday. As discussed in our weekly forecast, $64.0 is the gateway to a stronger and possibly longer-term bullish outlook. A sustained close above $64.0 will open the way for the next major objective at $66.4, with intermediate targets of $64.8 and $65.4 between.

WTI Crude Oil - 0.50 Kase Bar
WTI Crude Oil – 0.50 Kase Bar

Crude oil prices pulled back a bit from $63.98 and confirmed a weak bearish KaseCD divergence on the $0.50 Kase Bar chart. This, and the small wave down from $63.98, indicate there is a modest chance for a larger pullback tomorrow. Initial support is $62.9 and key support for tomorrow is $62.3. A close below $62.3 would call for a larger correction to $61.4, which is most important because a close below this would be an early indication that the move up may have stalled again. That said, the outlook does not become solidly negative until there is a sustained close below at least $60.3.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

The near-term outlook for natural gas became more negative today and prices are poised to test at least $2.70 and possibly $2.66 tomorrow. The small move up at the end of the day indicates resistance will probably be challenged first, but $2.76 and no higher than $2.79 is expected to hold.

The confirmation of a daily evening star and bearish RSI divergence and the settle below the 50-day moving average have opened the way for a continued pullback from Tuesday’s $2.788 swing high. In addition, March 9’s $2.712 swing low was taken out when prices fell to $2.71. This was the first time since February 12, when the upward sloping channel began to form, that prices have fallen below a prior daily swing low. The move down may be corrective, but these bearish factors and reversal patterns have increased odds for a test of major near-term support at $2.66. A close below this would open the way for targets below $2.60 again.

That said, support at $2.72 held on a closing basis and the small move up from $2.71 will probably challenge today’s $2.76 midpoint first. This level should hold, but key resistance is $2.79, near today’s open. A close above $2.79 would shift near-term odds back in favor of $2.82 and ultimately $2.87, the key threshold to a more positive outlook as discussed in our longer-term weekly forecast.

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 WTI crude oil forecast remains slightly negative given today’s decline to $60.27 after testing and holding resistance around $62.0. The move down is expected to continue, but a small double bottom around $60.27 indicates prices will probably challenge $61.4 first. Resistance is expected to hold.

Today’s decline to $60.27 fulfilled important projections for recent waves down from $64.24, $63.28, and $62.33 that connect to $59.7 and key support at $59.1. As discussed in the weekly forecast, $59.1 is the gateway for a longer-term bearish outlook. It may take at least another few days to reach $59.1, but a close below this would finally break WTI’s stalemate and open the way for a more bearish outlook.

That said, this afternoon’s move above the $60.85 swing high completes the small double intra-day bottom at $60.27. The pattern’s target is $61.4, which is also in line with today’s open. This level should hold, but a close over $61.4 would call for another attempt at $61.9 and possibly $62.6. The latter is most important for the near-term because it connects to $63.3 and ultimately $63.9, the key threshold for a long-term bullish outlook discussed at length in the weekly forecast.

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Since February 12, April natural gas had risen in a choppy upward sloping range that formed a bearish flag. However, prices broke higher out of the flag today and settled above the pattern’s upper trend line. The flag’s failure to break lower is bullish for the near-term and calls for a larger upward correction before the move down ultimately continues.

The next objective is $2.80, which is the 100-day moving average and a confluent projection for the multitude of waves and sub-waves that formed the flag. A close above this would call for $2.83 and possibly $2.87.

The $2.83 target is a potential stalling point because it is in line with the 62 percent retracement of the decline from $2.983 and the 200-day moving average. If the move up is going to remain a “normal” correction, $2.83 should hold.

April Natural Gas - Daily
April Natural Gas – Daily

Key resistance is $2.87. This is the smaller than (0.618) target for April natural gas’ wave $2.487 – 2.983 – 2.565. Waves that meet the smaller than target typically extend to the equal to (1.00) target, in this case, $3.06. Therefore, should April settle above $2.87 look for prices to rise above $3.00 again.

All of that said, the long-term outlook for natural gas remains negative, and even a move above $2.87 will do little to dampen that. For now, though, support at $2.70 should hold and key support is $2.65. These are the 38 and 62 percent retracements of the move up from $2.565, so far. A close below $2.65 would shift near-term odds back in favor of a continued decline to challenge major support in the low $2.50’s.

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 long-term outlook remains slightly negative for WTI crude oil, but the near-term outlook seems to switch from positive to negative on a day-to-day basis. This generally reflects a market that is unsure of itself and could indicate a trading range is forming. For now, though, given today’s failure to settle above the equal to (1.00) target of the wave $60.13 – 61.97 – 61.1 and the 62 percent retracement of the decline from $64.24, odds have shifted in favor of testing support tomorrow.

The formation of a daily shooting star setup and wave formation down from $63.28 call for $62.0 and possibly $61.6 tomorrow. These are targets for the small wave down from $63.28 and the shooting star’s completion and confirmation points. A close below $62.0 would open the way for $61.1 and $60.7. The latter is most important because it is the smaller than target of the wave $64.24 – 60.13 – 63.28 and connects to $59.2 and lower.

April WTI Crude Oil - 0.35 Kase Bar
April WTI Crude Oil – 0.35 Kase Bar

Initial resistance at $63.0 should hold, but the key level for the near-term is $63.5. A close above this would call for $64.1, the smaller than target of the wave up from $57.9. This level is the key to a bullish outlook because a close above $64.0 would shift long-term odds in favor of a continued rise to $66.5 and higher.

This is a brief analysis for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

The outlook for April natural gas remains negative. Prices are still oscillating within the upward sloping bearish flag, but today’s failure to test the top of the flag’s range at $2.73 indicates the formation should attempt to break lower tomorrow.

The flag’s lower trend line is nominally $2.64, but $2.63 is key because it is the 62 percent retracement of the move up from $2.565. It is also in line with the $2.633 swing low. A close below $2.63 will confirm the flag has broken lower and open the way for another test of $2.52, the gateway to a much more bearish long-term outlook.

April Natural Gas - Daily
April Natural Gas – Daily

Resistance at $2.73 should hold. This is near the top of the flag, the 50-day moving average, and the 38 percent retracement of the decline from $2.983. A close above this would call for a larger upward correction that could ultimately reach $2.84.

The $2.84 threshold is most important because it is split between the 62 percent retracement and the 200-day moving average. It is doubtful that prices will overcome (or even reach) $2.84 without significant help from external factors.

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.

WTI crude oil’s settle below Friday’s $63.1 midpoint and the daily bearish engulfing line is negative for tomorrow’s outlook.

There is immediate support at Friday’s $62.6 open, but the small wave formation down from $64.24 calls for at least $62.3 and likely $61.9. The latter is most crucial for the near-term because it is the 50-day moving average, the 38 percent retracement of the move up from $57.9, and is near last Thursday’s $62.1 midpoint.

April WTI Crude Oil - Daily
April WTI Crude Oil – Daily

A close below $61.9 would open the way for a test of key support at $60.3. This is the 62 percent retracement of the move up from $57.9 and is near calendar January’s open. Settling below $60.3 would shift long-term odds back in favor of a continued decline.

That said, the move down is probably corrective of the move up from $57.9. Today’s $63.5 midpoint and $64.1 open are initial resistance. $63.5 should hold but $64.1 is key. A close above this would call for tests of $64.5 and $65.5, the last levels protecting the $66.39 high.

This is a brief analysis for the next day or so. Our weekly Crude Oil Commentary and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.