Natural Gas Technical Analysis and Near-Term Outlook
January natural gas fulfilled the $2.99 objective as called for at today’s $3.002 high. This objective held on a closing basis as expected and a test of support is underway. However, the decline from $3.002 will likely prove to be a short-lived correction of the move up from $2.656. This is because the newly formed primary wave up from $2.656 met its smaller than (0.618) target at $3.002. Therefore, this wave now favors a move to fulfill its $3.09 equal to (1.00) target, which is in line with the 50 percent retracement of the decline from $3.507. Settling above $3.09 will call for a test of key resistance and the decision point for a renewed bullish outlook around $3.19.
The decline from $3.002 has already retraced 21 percent of the move up from $2.656. There is a good chance for natural gas to fall to $2.87, the 38 percent retracement, before the move up continues. Support at $2.87 is expected to hold. Closing below this will call for key near-term support at $2.79. Settling below $2.79 would shift odds back in favor of challenging major support at $2.66 again.
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.
