Natural Gas Technical Analysis and Near-Term Outlook
Natural gas briefly rose above the $2.663 intra-day swing high but stalled short of the critical $2.69 objective. The primary wave up from $2.453 still favors a test of its $2.69 equal to (1.00) target. This is also the 38 percent retracement of the decline from $3.06 and is in line with the lower trend line of the flag pattern that natural gas broke lower out of on April 5.
With that said, near-term odds lean bullish, but today’s shooting star warns that the move up might be short-lived and that natural gas could remain range-bound. Nonetheless, settling above $2.69, which looks like it will be a challenge, would open the way for $2.74 and possibly $2.78.
Additionally, the decline from $2.666 has formed a few small waves that suggest $2.59 will probably be challenged first. This is Tuesday’s midpoint and the completion point of the shooting star. Taking out $2.59 will call for a test of key near-term support at $2.53. Settling below $2.53 would confirm the shooting star and fulfill the smaller than (0.618) target of the wave down from $2.688. This wave then connects to $2.45, a close below which would call for a test of the crucial $2.40 level.
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.