Natural Gas Short-Term Forecast – May 23, 2018

The near-term outlook for June natural gas has become much more positive. Odds favor a continued rise toward the next major objective of $2.98. However, today’s long upper shadow indicates a test of support might take place first, though this should present a buying opportunity for bulls.

Yesterday, prices finally overcame the $2.873 swing high and broke higher out of the trading range that has dominated the market since mid-February. In addition, the close above $2.90, a highly confluent and important projection for each of the major waves up from $2.55, $2.638, $2.66, and $2.695, increased odds that the move up will continue. As stated in our weekly analysis and yesterday’s daily update, the key now is to sustain a close above $2.90 and ideally hold support at $2.87 and no lower than $2.83.

Natural Gas - Daily
Natural Gas – Daily

Relative odds (based on the number of times a target is found within our analysis) indicate the move up should extend to at least $2.95 and likely $2.98. The latter is the next major objective because it is in line with the $2.975 swing high and is the last target protecting the psychologically important $3.00 level.

Even so, this afternoon’s pullback from $2.939 left a long upper shadow on the daily chart, warning that a test of support might take place before $2.95 is met and eventually overcome. Should prices fall below $2.90 early tomorrow, look for a test of Tuesday’s $2.87 midpoint. This level should hold.

Key support for the near-term is $2.83, Tuesday’s open and the 200-day moving average. Settling below this would be a strong indication that the move up has failed and that prices will most likely settle back into a trading range with a slightly higher ceiling.

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.

After holding support near $2.70 last week, June natural gas rallied and overcame the $2.844 swing high. This was somewhat positive, but the move stalled just below the more important $2.873 swing high. This swing defines the top of the trading range that has contained prices since mid-February. For now, odds still slightly favor a break higher out of the range, though the pullback from yesterday’s $2.864 swing high is poised to extend to at least $2.79 and possibly $2.76 first.

Natural Gas - Daily
Natural Gas – Daily

Support at $2.76 is most important for the near-term and could present a buying opportunity for those that missed last week’s move up or have locked in long profits over the past few days. Even so, a close below $2.76 would shift odds back in favor of $2.71. This is the lowest that the small wave down from $2.864 projects, so this level should hold unless there is a bearish surprise from external factors (i.e. a much larger than expected build tomorrow).

Should prices overcome the $2.873 swing high the market must still settle above a highly confluent objective at $2.90 to prove a break higher out of the range isn’t a false breakout. Therefore, $2.90 is key resistance, a close above which would open the way for $2.93, $2.96, and possibly higher.

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.

This week, June natural gas has been bound within a very tight range between nominally $2.70 and $2.77. This is a challenging call right now because there are plenty of technical factors that indicate a break in either direction could take place soon. Even so, because the corrective range formed after a move down from $2.82 odds have a slight edge to break lower. A close below $2.70 would open the way for $2.66, $2.63, and possibly lower. Should prices settle above $2.77, look for the move up to challenge at least $2.81 and possibly $2.84.

Natural Gas - 0.02 Kase Bar
Natural Gas – 0.02 Kase Bar

All of that said, even upon a break out of the most recent range prices must still contend with the boundaries of a larger range that has persisted for the past few months between approximately $2.66 and $2.87.

For now, look for a break out of the smaller range between $2.70 and $2.77 within the next day or so to guide short-term trade decisions. There is still no evidence calling for a break higher or lower out of the larger range, so its boundaries would make for likely profit taking or stop and reverse entry levels until external factors provide more evidence to help determine a longer-term trend.

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 remains range bound between nominally $2.65 and $2.87 but has been working its way toward the upper end of the range for the past few days. A test of $2.84 is expected early tomorrow but this level will probably hold as there is evidence the move up is exhausted and poised for another test of $2.78 and possibly lower.

June sustained a close over $2.79, the smaller than (0.618) target of the wave up from $2.66, for the past two days. The equal to target for this wave is $2.85, which is near $2.84, the 200-day moving average. Waves that meet the smaller than target generally extend to the equal to target. Therefore, there is a good chance for at least $2.84 early tomorrow. This is extremely strong and important resistance, so a close above $2.84 would be quite positive for the near-term. However, to prove June has broken out of the recent range a close above the $2.873 swing high is necessary. For now, such a move is not expected without help from external factors (i.e. another larger than expected withdrawal from storage).

Natural Gas - Daily
Natural Gas – Daily

That said, today’s early move up fulfilled the $2.825 equal to (1.00) target of the wave up from $2.691 and the subsequent pullback formed a daily hanging man reversal pattern. The hanging man and confirmed bearish intra-day divergences indicate the move up is exhausted and ready for another test of $2.78. This is the hanging man’s confirmation point, a close below which would open the way for another downward oscillation within the trading range to $2.75 and lower.

So, with all factors considered look for a move up to at least $2.84 and then for a test of $2.78 again within the next day or so. Settling beyond either of these levels should paint a clearer picture of next week’s 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.

In the bigger picture, natural gas remains range bound between nominally $2.60 and $2.84. However, last Friday’s break higher out of a bullish flag and test of resistance at $2.76 set prices up to test the upper end of the trading range this week. So far, though, prices have struggled to reach the upper end of the range and the last three days form stars. Two, including the most recent, are shooting stars and the third is a hanging man. All three stars are part of an evening star reversal pattern setup that would be completed by a close below $2.71.

Natural Gas - Daily
Natural Gas – Daily

Given the shooting stars, hanging man, evening star setup and several bearish intra-day momentum divergences near-term odds favor another test of $2.71. As stated, a close below this would complete the candlestick reversal pattern and open the way for the confirmation point near $2.68. This is key support for the near-term because it is also the 62 percent retracement of the move up from $2.621. Settling below $2.68 would open the way for another test of the bottom of the recent trading range at $2.60.

That said, trading has been erratic and so far $2.71 has held after being tested on Monday. Should prices rise above $2.78 first, look for another attempt at $2.81 and even $2.87, resistance levels split around the upper end of the range at $2.84.

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 is still oscillating within a range between nominally $2.60 and $2.80. Traders are likely waiting on external factors to push the market out of the range, so for now, erratic trading will most likely continue.

Prices briefly fell below the lower trend line of the bullish pennant (not a textbook example) that formed during the decline from $2.764. However, the move stalled at $2.621 before rising to $2.69 and forming an intra-day double-top. Due to this pattern and the settle below Tuesday’s midpoint and the 62 percent retracement of the decline from $2.726 near-term odds favor a test of $2.64 tomorrow. This is the intra-day double top’s target and the larger than target of the wave $2.69 – 2.667 – 2.69.

Natural Gas with Kase StatWare - 0.015 Kase Bar
Natural Gas with Kase StatWare – 0.015 Kase Bar

A close below $2.64 would call for $2.60 and lower, though given recent choppiness it would not be surprising to see $2.64 hold and for a test of $2.72 resistance to take place. This is near the upper trend line of the pennant. A close above this would call for $2.76 and possibly higher.

So, the market will most likely test a bit lower tomorrow before possibly challenging resistance again. But, with all factors considered, there is still no evidence that the market will break out of the trading range and determine a long-term direction.

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 continues to show signs that it has settled into a trading range between nominally $2.55 and $2.85. Trading will most likely remain erratic as the market awaits factors to push it out of the range. However, it may be awhile before such factors come forth as the market will be pressed to balance inventories that are well below the five-year average against strong production during the low demand spring shoulder months.

Quantitative factors are balanced and reflect the neutral near-term outlook. Today’s initial move lower held support at $2.67 before rising and challenging important resistance at $2.75. The subsequent pullback from $2.746 forms a long upper shadow on the daily candlestick and is poised to challenge $2.67 again tomorrow. The likelihood of a test of support was also accentuated by a confirmed bearish KaseCD divergence on the $0.015 Kase Bar chart. A close below $2.67 will call for $2.63, which connects to $2.59 and $2.56.

That said, trading will likely remain choppy and a close above $2.74 would open the way for $2.78. Settling above $2.78 would shift near-term odds in favor of challenging the top of the trading range around $2.85.

Natural Gas with Kase StatWare - 0.015 Kase Bar
Natural Gas with Kase StatWare – 0.015 Kase Bar

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 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.

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.

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.