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.
Natural gas prices plummeted after the August contract tested and failed to close above the $3.57 completion point of a weekly morning star last week. The move down reflects renewed bearish sentiment, and prices settled below a longer-term bearish decision point at $3.08 today. The $3.08 objective is the smaller than (0.618) target of the primary wave down from $5.254 and connects to $2.37 as the equal to (1.00) target. Therefore, the outlook has become much more bearish for the coming weeks.
Tomorrow, look for a test of at least $3.03 and likely $3.00. Falling below $3.00, which may initially be a challenge given its psychological significance, will call for the $2.94 smaller than target of the primary wave down from $4.230. This is also the equal to (1.00) target of the first wave down from $4.230.
Nonetheless, the move down is due for a correction because the first intraday wave down from $3.629 is overextended. Daily momentum is nearing oversold territory and conditions are ripe for daily bullish divergences on a few momentum oscillators. Even so, there are no bullish patterns or confirmed signals that call for a correction. Should prices turn higher tomorrow and close above today’s $3.25 open, the near-term odds will shift in favor of testing the respective 50 and 62 percent retracement levels of the decline from $3.629 at $3.35 and $3.41.
