Natural Gas Technical Analysis and Near-Term Outlook
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Natural gas rose to $3.138 but stalled just below a confluent $3.16 threshold that is in line with the larger than (1.618) target of the waves up from $2.592 and $2.798 and the intermediate (1.382) target of the wave up from $2.676. The 100-day moving average also held. The pullback from $3.138 settled below the 21 percent retracement of the rise from $2.592 and confirmed a daily bearish KaseCD momentum divergence. The bounce from $2.985 held the 62 percent retracement from $3.138 at $3.08, and prices are falling again. Therefore, there is also the potential for a head and shoulders pattern on the $0.035 Kase Bar chart. This reversal pattern would be confirmed by a close below $2.98.
Because of these bearish technical factors, the outlook for natural gas tomorrow is bearish. A test of the $2.98 smaller than (0.618) target of the wave down from $3.138 is expected. Closing below this will confirm the head and shoulders, calling for a test of this wave’s equal to (1.00) target, the 38 percent retracement from $2.592, and the 50-day moving average at $2.93. Settling below $2.93 will warn that the move up is failing and call for $2.87 and $2.83. The $2.83 objective is in line with the target of the head and shoulders.
Nevertheless, all significant swing lows that formed during the rise from $2.592 have held, and the daily trend indicators are bullish. The wave formation also still favors a test of $3.16. This suggests that the pullback from $3.138 is another correction. Overcoming $3.08 will call for another attempt to fulfill and close above the key $3.16 resistance level. This has become doubtful, but settling above $3.16 will put the near-term odds in favor of natural gas rising to $3.20 and $3.24 in the coming days.
