Natural Gas Price Forecast – December 16, 2020

Natural Gas Technical Analysis and Near-Term Outlook

Natural gas formed another hanging man pattern today. As discussed yesterday, this would normally dampen odds for a larger test of resistance. However, the intra-day wave formation up from $2.368 looks to be unfolding as a five-wave pattern, and the move up from $2.596 is likely Wave V, which targets $2.80. This is the XC (2.764) projection of Wave I, the smaller than (0.618) target of Wave III, and the larger than (1.618) target of Wave 1/V. The connection to $2.80 is made through $2.72 and then $2.76.

Natural Gas - $0.035 Kase Bar Chart
Natural Gas – $0.035 Kase Bar Chart

Once $2.80 is met, a significant three-wave test of support is anticipated. An eventual close above $2.80 would call for the move up to unfold as a larger five-wave pattern (or at least a nested three-wave pattern) that targets $2.93 and higher.

With that said, the hanging man patterns warn that the move up might be a simple three-wave correction of the decline from $3.507 that is stalling around $2.70. Should natural gas take out the $2.618 swing low look for a test of $2.58. This is the 38 percent retracement of the rise from $2.368 and is a level that must hold for the move up to continue to unfold as a five-wave pattern as expected. Settling below $2.58 would call for a test of key support at $2.50, a close below which would confirm the corrective move up is over and would shift odds back in favor of a continued decline.

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.

Published by

Dean Rogers, CMT

Dean Rogers, CMT 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, Natural Gas, and Metals 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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