Natural Gas Price Forecast
Natural gas has adopted a bullish outlook for the remaining summer months after rallying to a high of $1.924. This was the equal to (1.00) target of the August contract’s primary wave up from $1.517 and was in line with the 50-day moving average. However, today’s bearish engulfing line calls for a deeper test of support before the move up continues above $1.92 to challenge $1.98 and higher.
Based on the wave formation down from $1.924 and the retracements of the move up from $1.517, August natural gas should fall to at least $1.78 and likely $1.73 before settling above $1.92. The $1.73 objective will most likely hold. Once this target is met, odds for another test of $1.92 will begin to increase.
Nevertheless, closing below $1.73 would call for key support at $1.67 to be challenged. This is the larger than (1.618) target and the 62 percent retracement. Settling below $1.67 is doubtful but would reflect a bearish shift in external factors (e.g. weather and/or supply and demand). This would then call for another test of $1.60 and possibly lower.
During the next day or so, as prices fall to challenge support, resistance at $1.88 should hold. Rising above this will call for another test of $1.92. An eventual close above $1.92 is expected and will clear the way for $1.98 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.