Natural Gas Still Testing (and Holding) $2.79

Natural gas has positioned itself for a break out of the recent coiling pattern that began forming on January 20. March futures tested the crucial $2.79 area this morning, and most technical factors still favor continued decline. However, March’s inability to close below $2.79 is making this recent range look more like a short-term bottoming formation versus a corrective pattern. In addition, a bullish KasePO divergence and first class long permissions (blue dots) for the KEES indicator on the 240-minute equivalent Kase Bar chart indicate prices may attempt to rise above $3.01 again after tomorrow’s U.S. Energy Information Administration (EIA) Natural Gas Weekly Update.

NGH15

The key for a break higher will be a close over $2.97. This is the 0.618 projection for the wave $2.762 – 3.957 – 2.81. March already stalled at this level once, but overcoming $2.97 would open the way for $3.01, which then connects to $3.08 as the 1.382 projection. The $3.08 level is also near the top of the window that took place between January 16 and 20, so a close over this in coming days would be bullish for the near-term outlook.

That said, even though March has held $2.79 on a closing basis thus far, it has not been able to maintain momentum behind any recent price rise. If natural gas cannot break higher this week, the odds of an extended upward correction will quickly diminish. A close below $2.79 would then open the way for the next leg down, where the first target of that move is $2.71.


Published by

Dean Rogers

Dean Rogers is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer, but has developed into Kase’s senior technical analyst. He writes Kase’s award winning weekly Crude Oil and Natural Gas Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

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