Natural Gas Price Forecast – September 16, 2020

Author: 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.

Natural Gas Technical Analysis and Near-Term Outlook

The near-term outlook for natural gas has shifted back to being firmly bearish. Yesterday’s move up proved to be another pullback to challenge the neckline of the complex head and shoulders. Also, natural gas settled below the crucial $2.28 objective and fell toward another important target at $2.22 after the settlement.

The $2.22 target is the 50 percent retracement of the rise from $1.700 and a confluent wave projection. There is also a target at $2.19 that has increased in importance during the past few days. This area between $2.19 and $2.22 may prove to be a stalling point. Even so, any move up from this area will most likely prove to be a short-lived correction and is expected to hold $2.31.

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

Now that natural gas has taken out the $2.28 equal to (1.00) target the primary wave down from $2.743, the decline is poised to extend to the $2.15 intermediate (1.382) target and then the $2.10 larger than (1.618) target. The $2.10 target is crucial and is the most likely stalling point for the decline from $2.743 because this is also the 62 percent retracement of the move up from $1.700 and the complex head and shoulders’ target.

The 50-day moving average held on a closing basis today, but prices have already moved below that level after the settlement. Otherwise, there are no signals or patterns that call for the move down to end. As stated earlier, resistance at $2.31 is expected to hold and $2.35 is key for the near-term. Settling above $2.35 will call for another attempt at $2.43 and 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.

WTI Crude Oil Technical Analysis and Short-Term Forecast

WTI crude oil broke higher out of an intra-day coil pattern (dark blue dotted lines) and settled the day above the $38.1 smaller than (0.618) target of the primary wave up from $36.13 (red). The $38.1 level was also the midpoint of the September 8 candlestick. This was positive for the near-term outlook and calls for a test of $39.0 tomorrow. However, $39.0 will likely hold.

The $39.0 objective is extremely important for the near-term outlook because it is the equal to (1.00) target of the primary wave up from $36.13 (red) and the 38 percent retracement of the decline from $43.78 (pink). Settling above this would warn that the recent move down might already be complete and would call for a test of $40.0 and higher.

WTI Crude Oil - $0.35 Kase Bar Chart
WTI Crude Oil – $0.35 Kase Bar Chart

Nevertheless, aside from today’s move up, the rise from $36.13 has been extremely shallow and choppy. Therefore, this move is most likely corrective. Additionally, the move up from $36.13 could form a bearish flag pattern if $39.0 holds. This is because a trend line parallel to the lower trend line of the coil (gray dotted line) will intersect with $39.0 tomorrow.

Once $39.0 is met, odds for a test of $37.6 will increase. Holding $39.0 and settling below $37.6 will confirm that a flag is forming and will call for a test of $37.1. This is currently the 62 percent retracement of the rise from $36.13 and is in line with the potential flag’s lower trend line. Settling below $37.1 will call for another test of $36.0.

Granted, $36.0 was and still is, major support for the longer-term outlook. Therefore, the move down might be complete. However, the fate of WTI’s near-term outlook will be determined by holding or closing above $39.0 tomorrow.

Brent Crude Oil Technical Analysis and Short-Term Forecast

Brent formed a double bottom around $39.3 that will be confirmed by a close above the $41.20 swing high. The target of the double bottom is $43.1. Based on the waves up from $39.30, Brent should rise to $41.3 tomorrow. However, an immediate close above this (and the $41.20 swing high) will likely be a challenge because $41.3 is the 100-day moving average.

Once $41.3 is met, odds for a test of $39.9 will rise. Settling below $39.9 would imply that a rectangle pattern is forming instead of a double bottom. This pattern would be bearish for the outlook rather than bullish. In this case, odds would shift in favor of testing $39.3, a close below which would call for the move down from $46.61 to continue.

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.

Gold Technical Analysis and Near-Term Outlook

Gold is trading in a narrowing range that forms a coil pattern. Coils are not exceptionally reliable patterns like flags and pennants when it comes to determining a breakout direction. However, they lean in favor of a breakout in the direction of the prior move before the coil formed, in this case, down. A breakout of the coil should take place during the next few days.

Coils reflect uncertainty, which makes this is a very tight near-term call for gold right now. Even so, odds continue to lean in favor of a break lower. Falling below $1936 will call for $1820. This is the smaller than target of the wave down from $2001.2. Settling below this will confirm a break lower out of the coil and call for a test of $1888 and likely lower.

Gold - Coil on $15 Kase Bar Chart
Gold – Coil on $15 Kase Bar Chart

Nevertheless, gold briefly broke the coil’s lower trend line on Tuesday, but since then has challenged the 62 percent retracement of the decline from $2001.2 and the smaller than (0.618) target of the wave up from $1908.4. Prices also settled above the 20-day moving average today. These factors suggest the coil’s upper trend line around $1988 might be challenged before another test of support. Also, the wave up from $1908.4 calls for a test of $2002. Settling above $2002 would confirm a break higher out of the coil and clear the way for $2023 and likely $2041.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial

Natural Gas Near-Term Technical Analysis and Outlook

The near-term outlook for natural gas remains bearish after challenging support at $2.34 when prices fell to $2.328 today. This is a relatively important area of support because it is the intermediate (1.382) target of the first wave down from $2.743 and the 38 percent retracement of the rise from $1.700. Even so, the subsequent move up from $2.328 forms a bearish pennant that should break lower tomorrow.

Natural Gas - Complex Head and Shoulders on $0.035 Kase Bar Chart
Natural Gas – Complex Head and Shoulders on $0.035 Kase Bar Chart

Closing below $2.33 (adjusted from $2.34) will clear the way for $2.28. This is another potential stalling point because it is the larger than (1.618) target of the first wave down from $2.743 and the equal to (1.00) target of the primary wave down from $2.743. As discussed in yesterday’s update, settling below $2.28 might initially be a challenge, but odds for this are increasing.

The one caveat headed into tomorrow is that natural gas has not settled below the $2.40 neckline of the complex head and shoulders pattern. Prices settled at exactly $2.40 yesterday and $2.406 today. This is not too concerning but is something to watch during the next few days. Should natural gas rise above $2.45, look for a test of $2.50. This level is expected to hold. Key resistance and the barrier to a bullish near-term outlook is $2.60.

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 Short-Term Price Forecast

WTI crude oil fell as called for in this week’s Kase Commentary on Crude Oil but has reached the crucial $36.0 objective much faster than anticipated. The $36.0 objective is split between the $36.11 larger than (1.618) target of the primary wave down from $43.78 and the $35.94 38 percent retracement of the rise from $23.26. Meeting this objective so quickly signals that a much deeper test of support than previously expected may unfold. However, because the move down stalled at $36.13 today, a test of resistance is expected first.

WTI Crude Oil – $0.35 Kase Bar Chart

Based on the small wave up from $36.13, WTI should rise to at least $37.4 and likely $38.1 early tomorrow. These are the equal to (1.00) and larger than targets, respectively. The $38.1 level is also today’s midpoint and is expected to hold. Rising above this will call for key resistance at $39.4. This is the highest the wave up from $36.13 projects and is near today’s open. Closing above $39.4 is doubtful but would call for $40.0 and possibly higher and signal that the corrective move down might already be complete.

Once $37.4 is met, odds for another test of support around $35.9 will increase. Falling below $36.36 will invalidate the wave up from $36.13 that calls for $37.34 and higher. This would also call for a test of $35.9, a close below which will clear the way for $35.0 and lower.

Brent Crude Oil Short-Term Price Forecast

Brent fell as expected but has challenged the $39.1 objective sooner than predicted. Nonetheless, odds favor a continued decline and a move below $39.4 will call for $38.8 and lower.

That said, the move down stalled just above the crucial $39.1 area and the wave up from $39.31 implies that a test of $40.3 and probably $40.9 will take place first. Resistance at $40.9 is expected to hold. Key Resistance is $42.1, a close above which will clear the way for $43.0 and higher.

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.

Gold Technical Analysis and Near-Term Outlook

Gold is trading in a narrowing range that forms a coil pattern. Coils reflect indecisiveness and are not the most reliable patterns. Even so, they generally break in the direction of the prior move, in this case, down.

Gold - Coil on $15 Kase Bar Chart
Gold – Coil on $15 Kase Bar Chart

Today’s decline to $1927.2 challenged the lower trend line of the coil and fulfilled the smaller than (0.618) target of the wave down from $2024.6. This is bearish and suggests that the move down should continue to the $1888 equal to target. This is in line with the smaller than (0.618) target of the primary wave down from $2089.2. Settling below $1888 will call for a more significant decline.

Nevertheless, the move up to $2001.2 earlier in the week fulfilled the smaller than target of the wave up from $1874.2. This wave positive because this wave connects to $2059 and higher. The coil pattern may be building a bullish base, but until gold settles above $2001, the near-term outlook will continue to lean bearish.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

Natural Gas Near-Term Outlook

Natural gas confirmed an intra-day head and shoulders reversal pattern by settling below $2.50 today. The pattern’s target is $2.26, which is also in line with the larger than (1.618) target of the primary wave down from $2.743. The connection to $2.26 is made through $2.42 and $2.34. The $2.34 objective is crucial because this is the most confluent target on the chart and is the 38 percent retracement of the rise from $1.700.

Natural Gas - Head and Shoulders on $0.025 Kase Bar Chart
Natural Gas – Head and Shoulders on $0.025 Kase Bar Chart

For the five-wave move up from $1.700 to have any chance at extending again and reaching its $2.81 objective $2.34 must hold. At this point, holding $2.34 for more than a day or two is doubtful. It now looks as though the five-wave trend has ended and that a large three-wave correction is underway. Settling below $2.34 will confirm this.

The move down has been somewhat choppy for the past few days. This suggests the decline is corrective. Even so, resistance at $2.57 is expected to hold as the move down extends. Key near-term resistance is $2.63. This is the 62 percent retracement of the decline from $2.743, a close above which would call for a test of $2.68 and then $2.73. Settling above $2.73 would clear the way for a push to challenge $2.81.

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 Short-Term Price Forecast

The outlook for WTI crude oil continues to lean negative. WTI settled below the 200-day moving average for the fourth straight day after another early test of resistance. This has formed long upper shadows on the daily candlesticks for the last three days, all of which form shooting star. Granted, shooting stars within a range-bound market are not as reliable as those that form after a long uptrend, but they still reflect near-term weakness.

Nevertheless, WTI settled back above the 20-day moving average today and is still trading in the upper half of the Bollinger Bands, which are squeezing again. There is also a bullish coil that formed on the intra-day charts for the past few days.

WTI Crude Oil – $0.35 Kase Bar

The near-term call remains a challenge, but odds still favor an eventual break lower. Closing below $42.3 will clear the way for the key objective at $41.5. This is a highly confluent wave projection and the 50-day moving average. Settling below $41.5 will confirm a break lower out of the Bollinger Bands and clear the way for a much deeper correction before the move up eventually continues.

Conversely, prices have risen a bit after today’s settle, so there is a good chance for a test of $43.3 first. This is the smaller than (0.618) target of the wave up from $42.56 and connects to $43.8. This level is expected to hold. Key resistance and the barrier for a near-term bullish outlook is $44.2. Settling above $44.2 would be a strong indication that a much larger move up is underway.

Brent Crude Oil Short-Term Price Forecast

Brent crude oil settled back above the 20-day moving average today, but the waves down from $46.54 continue to call for a deeper test of support. Falling below $45.0 will open the way for at least $44.2. This is in line with the 50-day moving average and the $44.17 swing low. Settling below $44.2 would strongly indicate that a much larger correction is beginning to unfold.

Trading will likely remain choppy for the near-term though. Resistance at $46.2 is expected to hold and $46.7 is key. Settling above $46.7, which is near the 200-day moving average and the 50 percent retracement of the decline from $66.15, would imply that prices have finally broken higher out of the upward sloping range. This would be quite bullish for the long-term outlook.

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.

Gold Near-Term Outlook

The near-term outlook for December gold futures leans bearish. Gold initially rose to $1980 as expected today. However, this level, which is in line with the 62 percent retracement of the decline from $2024.6 and the 20-day moving average, held on a closing basis. Also, the subsequent move down from today’s $1987.0 high fulfilled the $1915 smaller than (0.618) target of the wave down from $2024.6. Therefore, odds favor a continued decline, and a move below $1915 will clear the way for $1891 and lower.

Gold - $10 Kase Bar Chart
Gold – $10 Kase Bar Chart

Nevertheless, trading has been erratic for the past few days. So far, the move up from $1914.7 has held the 38 percent retracement of the decline from $1987.0. However, should gold rise a bit higher first, look for resistance at $1961 to hold. Closing above this would shift near-term odds in favor of key resistance at $1997. This is the equal to (1.00) target of the wave up from $1908.4 and, more importantly, the smaller than target of the wave up from $1874.2. Settling above $1997 would call for gold to make a push for at least $2023 and likely higher next week.

This is a brief analysis for the next day or so. Our weekly Metals Commentary and daily updates are much more detailed and thorough energy price forecasts that cover key COMEX precious metals futures contracts and LME Non-Ferrous (Base) metals, spot gold, the gold/silver ration, and gold ETFs. If you are interested in learning more, please sign up for a complimentary four-week trial.

Natural Gas Near-Term Outlook

Tomorrow’s outlook for October natural gas leans negative after confirming an intra-day double top that formed between the $2.658 and $2.654 swing highs. The double top was confirmed by today’s close below the $2.564 swing low and the pattern’s target is $2.47. Double tops like this one meet their target 64 percent of the time.

Natural Gas - Double Top on $0.015 Kase Bar Chart
Natural Gas – Double Top on $0.015 Kase Bar Chart

The decline will not likely last much longer because the move down from $2.658 forms a corrective wave in a larger scale five-wave uptrend. There is also immediate support at $2.50 that may prove to be a stalling point early tomorrow. This is in line with the larger than (1.618) target of the primary wave down from $2.658 and the 62 percent retracement of the rise from $2.424. Therefore, closing below $2.47 is doubtful. However, this would clear the way for a larger correction to challenge $2.39 and possibly lower.

Once the $2.47 target is met odds for a continued rise will increase. However, should $2.50 hold, look for initial resistance at $2.57, and then $2.61. Settling above $2.61 would strongly imply that the correction is complete and clear the way for $2.67 and 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.