Natural Gas Technical Analysis and Near-Term Outlook
Natural gas overcame the $3.045 intra-day swing high today. This invalidated the prior primary wave down from $3.204 that had fulfilled its smaller than (0.618) at the $2.903 swing low. This is bullish for the near-term outlook and suggests that natural gas will now rise to challenge $3.09. This is the 62 percent retracement of the decline from $3.204. Closing above this would strongly imply that the corrective move down is complete and clear the way for a test of $3.15 and possibly $3.20.
With that said, the $3.045 swing high was only marginally overcome and there is now a new primary wave down from $3.204 that projects to $2.86 as the smaller than (0.618) target. Additionally, the move up from $2.903 lacks a meaningful primary wave. Therefore, there is still a reasonable chance of a deeper test of support or for prices to settle into a period of consolidation. Should natural gas take out $2.99 early tomorrow look for a test of $2.96, which, based on current technical factors is expected to hold. Key near-term support is $2.90, a close below which would call for a test of $2.86.
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.