Natural gas rose in an aggressive manner again today and settled above the 62 percent retracement of the decline from $2.044. This suggests prices will likely rise to challenge $2.00 and possibly higher again soon. There are no reversal patterns or setups that call for the move up to stall. However, there is a significant objective at $1.93 as the larger than (0.618) target of the only decipherable wave up from $1.521. This is also the 78 percent retracement of the decline from $2.044. Therefore, because the move up currently lacks a wave structure that can support a move above $2.00, there is a good chance natural gas will stall near $1.93. From there, a downward correction should take place before prices rise to $2.00 and higher.
The key for the move up will be holding resistance at $1.76 on a test of support. Since February, there have been two other moves up on the continuation chart to challenge resistance around or just above $2.00. Both moves, one up from $1.753 to $2.025 and then other from $1.610 to $1.998, failed on the first sign of any weakness and a test of support. Therefore, until a reasonable test of support holds it will be hard to call for a sustainable move above $2.00.
For May natural gas the key threshold is $1.76, the 38 percent retracement of the move up from $1.521. Closing below this would suggest the move up has failed again and would call for $1.67 and possibly $1.59. The latter of these is the smaller than target of the wave down from $2.044 and connects to targets well below the current $1.521 contract low.
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