Natural Gas Technical Analysis and Near-Term 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.
August natural gas continued to decline today and settled below the intermediate (1.382) target of the intraday wave down from $4.230 and the 78 percent retracement of the rise from $3.394. The August contract is poised to challenge the $3.54 larger than (1.618) target of the wave down from $4.230 early tomorrow. This is a potential stalling point. However, given the aggressive nature of the decline for the past few days, there is a good chance for a test of $3.50. This important objective sits just below the lower threshold of the range that prices had traded in for a few weeks between approximately $3.51 and $3.91. Closing below $3.50 will likely be a challenge without a test of resistance first, but would confirm a bearish outlook and open the way for $3.44 and likely $3.38 in the coming days.
The move down is due for a correction soon. The challenge is that there are no bullish patterns or signals that call for the move down to stall. Nonetheless, should prices rally before taking out $3.50 and close above key near-term resistance at $3.70, look for a test of $3.77 and $3.82. Holding $3.50 and settling above $3.82 would suggest that prices are settling back into a trading range.
