Natural Gas Technical Analysis and Near-Term Outlook
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June natural gas held major support at $3.02 on a closing basis and rallied on Monday. The move up confirmed daily bullish KaseCD and Stochastic divergences and challenged the 21 percent retracement of the decline from $5.069 at $3.44. Prices also settled above the 200-day moving average on Tuesday, but this level was taken out again on Wednesday. Even so, the pullback from $3.457 looks like a correction and held the equal to (1.00) target of the wave down from $3.457 and the 38 percent retracement of the rise from $3.007 around $3.28 on a closing basis today. The near-term outlook remains bullish, and overcoming $3.39 will call for another test of $3.44, a close above which will open the way for $3.53 and higher.
Nevertheless, the move up from $3.007 is still a simple correction, and today’s small decline dampens the odds for a continued rise. There is also a reasonable chance for another test of $3.28, given the $3.35 smaller than (0.618) target of the wave up from $3.260 held. Taking out $3.28 would call for a test of $3.22 and possibly key support at $3.18. The $3.18 threshold is the larger than (1.618) target of the wave down from $3.457 and the 62 percent retracement of the rise from $3.007. Settling below $3.18 would strongly imply that the move up from $3.007 is complete and put the odds in favor of natural gas falling to challenge $3.02 again.
