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.
July natural gas tested the equal to (1.00) target of the wave down from $3.396 and the 62 percent retracement of the rise from $2.893 at $3.08 before rallying and recapturing the 20-day moving average. The move up stalled at the 50 percent retracement from $3.396 and held the 38 percent retracement on a closing basis. Even so, prices have failed to close below the 50-day moving average for the past few days, and holding $3.08 on a closing basis implies that prices will continue to trade in a range between approximately $3.08 and $3.40 as discussed in our weekly Commentary.
The near-term outlook remains tight, but the odds now lean in favor of testing $3.23 again. Overcoming this will call for the 62 percent retracement from $3.396 and the smaller than (0.618) target of the wave up from $3.072 at $3.28. Settling above $3.28 will clear the way for $3.34 and possibly another test and attempt to close above key resistance at $3.40 in the coming days.
Nevertheless, the pullback from $3.249 shows the potential to test the 62 percent retracement of the rise from $3.072 at $3.14 first. Falling below $3.14 would suggest that today’s rise was the corrective leg of a wave down from $3.376 that projects to $3.07 as the smaller than target. Closing below $3.07 will shift the near-term odds back in favor of a decline to challenge $3.00 and likely $2.96 instead.
