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.

WTI Crude Oil

WTI crude oil’s trend remains bullish but is still showing signs of exhaustion. Daily and weekly momentum indicators are overbought and setup for bearish divergence, the weekly candlesticks continue to form long upper shadows, and before yesterday’s rise to a new high the daily chart formed a series of spinning tops, a shooting star, and an evening star. The challenge is that reversal patterns like these have been set up for the past few weeks or continue to form, but there has been no follow-through to confirm the patterns.

Today’s pullback and test of yesterday’s $71.9 midpoint provides another opportunity for WTI crude oil prices to follow-through on a much-needed correction. The small waves down from $72.9 call for a test of Monday’s $71.5 open, a close below which would call for $70.9 and possibly lower.

Even so, relative odds (based on the number of times a target is found within our analysis) indicate $70.9 will probably hold and that the move up should extend to $73.2 soon. A move above $72.6 before $71.5 is met would shift near-term odds back in favor of $73.2. This target has the highest relative odds, and due to its confluence is another potential stalling point for WTI. Settling above $73.2 would open the way for $74.4 and higher.

With all factors considered, look for a test of at least $71.5 and possibly $70.9 tomorrow. Support at $70.9 should hold and until proven otherwise the move up will likely extend to $73.2. Therefore, at this point, any pullback will likely be corrective and could provide a buying opportunity for traders that have recently taken profit or missed the opportunity to add to long positions Monday.

Brent Crude Oil

Brent crude oil formed a double top at $80.5 and today’s shooting star reversal pattern setup calls for a test of at least $78.9 tomorrow. A close below this would confirm the shooting and open the way for a test of the double top’s $78.1 confirmation point. This is key support for the near-term, a close below which would call for an extended downward correction to $77.2 and possibly lower (the double top’s target is $75.7).

Brent Crude Oil - Double Top
Brent Crude Oil – Double Top

That said, reversal patterns like the double top and shooting star have been set up repeatedly and failed during the past few weeks. In addition, relative odds indicate that any move down right now will most likely be corrective and that eventually, prices should rise to $81.6. For now, though, $80.0 should hold and key resistance is $80.5. A close above $80.5 would shift near-term odds back in favor of a continued rise to $81.6.

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.

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.

The overall outlook for WTI crude oil is positive. However, a double top around $71.9, daily spinning top candlestick reversal pattern, and intra-day bearish momentum divergence indicate the pullback from $71.92 should extend to at least $70.4 tomorrow. This target is split between a projection of the wave down from $71.93 and the double top’s $70.26 confirmation point.

WTI Crude Oil - Double Top
WTI Crude Oil – Double Top

An early move below $70.4 will open the way for $69.9, $69.3, and possibly $68.8. Of these targets, $69.3 is the most likely stalling point because it is near a confluent wave projection and key retracement of the move up from $67.63. Even so, $68.8 has reasonable odds because it is split between the double top’s target and the most important projection of the wave down from $71.92.

Should prices turn higher and overcome $71.4, look for another attempt at $72.0, a close above which would wipe out the double top, spinning top, and bearish divergence signals. This would also open the way for the move up to extend to the next major target at $72.8. This is the most confluent objective as discussed in our weekly Commentary and another likely stalling point for WTI.

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.

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.

WTI Crude Oil Forecast

Late last week, June WTI crude oil broke higher out of a daily bullish flag. This week’s crude oil price forecast indicated there was still a crucial target at $70.1, but this objective was overcome with relative ease Monday. Today’s corrective pullback stalled at $67.63 before settling the day at $69.06. This was just above the upper trend line of the bullish daily flag, and this afternoon prices are already nearly $1.00 higher and have overcome the key 62 percent retracement of the decline from $70.84. Therefore, the outlook remains bullish and the move up is still poised to extend.

The wave formations up from $67.63 indicate WTI should challenge at least $70.6 and likely $71.1 tomorrow. This afternoon’s bullish sentiment (which is purportedly based on external factors) could also drive prices to $71.7 and even $72.8, especially if prices rise above $71.1 early.

WTI Crude Oil - Daily Bullish Flag
WTI Crude Oil – Daily Bullish Flag

That said, when external factors and bullish sentiment are driving the market prices tend to become over exuberant and can overshoot reasonable objectives. While $71.1 and $72.8 make technical sense for the near-term, anything above $72.8 without a reasonable pullback first would warrant caution of a spike type scenario that could reverse very quickly.

For now, look for support at $68.6 to most likely hold with the key threshold at $67.9. A close below the latter would indicate the move up has failed and would open the way for a larger downward correction to $66.8 and lower.

Brent Crude Oil Forecast

Although Brent formed a bearish daily hanging man, prices have risen over $1.00 this afternoon after settling at $74.85. The wave formation up from $73.1 is poised to reach at least $76.8 and likely $77.8 tomorrow. A close above the latter will open the way for $78.6 and $79.9.

That said, the bullish sentiment driving prices higher this afternoon (see WTI’s comments above) could push prices too high too fast, causing a spike type scenario that could quickly reverse. Therefore, caution is warranted on any move above $79.9 over the next few days without a reasonable pullback first.

For now, support at $74.2 should hold, though prices will have to drop below the $73.07 swing low to indicate the move up has failed. In this unlikely case, look for a larger downward correction to $71.7 and possibly $70.8.

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.

June WTI crude oil briefly broke lower out of the recent sideways trading range between nominally $67.1 and $69.5 when it fell to $66.85 today. The settle below April 18’s $67.58 midpoint indicates the near-term outlook is negative, though at this point prices will likely have to settle below $66.7 to confirm the downward correction is going to extend before prices eventually challenge the next major objective at $70.1.

WTI Crude Oil - Daily
WTI Crude Oil – Daily

Tomorrow, look for a test of $66.7, a close below which would open the way for $66.0 and lower. Even then, WTI crude oil still has a long way to go before the long-term outlook becomes bearish, so any move down right now will most likely be corrective.

That said, prices settled just above the bottom of the recent trading range and the small wave formation up from $66.85 indicates a test of today’s $67.9 midpoint might take place first. A close above this would call for key near-term resistance at $68.6. For the downward correction to extend to $66.0 and lower this week $68.6 must hold. A close above this would shift near-term odds back in favor of $70.1.

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

June WTI crude oil failed to rise above the $69.55 swing high today after stalling at $69.38. The subsequent move down formed a bearish engulfing line and challenged the $67.6 completion point of the daily evening star and hanging man bearish reversal pattern that has been set up since April 19.

WTI Crude Oil - Daily Candlesticks
WTI Crude Oil – Daily Candlesticks

A weak bearish KaseCD and MACD divergence indicate the move down is most likely corrective but the move down is poised to extend to at least $67.1 and possibly $66.6 tomorrow. A close below the latter would confirm the evening star and hanging man and take out the 38 percent retracement of the move up from $61.86, opening the way for a larger correction before the move up continues.

After such an aggressive pullback, it is not uncommon to see a test of resistance overnight. Therefore, today’s $68.3 midpoint might be tested but should hold. Tomorrow’s key resistance level is $69.0, a close above which would wipe out the bearish engulfing line and negate the evening star and hammer pattern. This would, in turn, open the way for a test of resistance split around $70.0 at $69.8 and $70.2. Of these levels, $70.2 is most important.

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.

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.

Late last week, May WTI crude oil fulfilled the $67.3 smaller than (0.618) target of the wave $57.6 – 66.55 – 61.81. Although prices settled above this on Friday the move up struggled to extend and an evening star setup with two stars formed. This reversal pattern’s $66.2 completion point was challenged Monday and again today, but so far prices have failed to close below $66.2. In addition, bullish intra-day momentum divergences were confirmed at today’s $65.56 swing low and the daily chart formed a pseudo bullish hammer.

WTI Crude Oil - Daily Candlesticks
WTI Crude Oil – Daily Candlesticks

The long-term outlook for WTI crude oil remains bullish, but it is a very tight call for the near-term. Given the most recent near-term factors are positive, look for a test of at least $67.0 and possibly $67.4 tomorrow. A close above the latter would open the way for a new high of $68.3, which then connects to $69.1 and higher.

That said, given the balance between near-term positive and negative technical factors it is too soon to throw in the towel on the likelihood of a larger downward correction before the move up continues. A close below $66.2 will increase odds for such a move but the key near-term level is $65.6. Settling below this would open the way for $65.1, which then connects to $64.5 and lower.

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.