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.
October natural gas rose to test and hold the $3.15 smaller than (0.618) target of the new wave up from $2.738 on a closing basis. This was bullish for the outlook because most waves that meet their smaller than target extend to fulfill at least the equal to (1.00) target, in this case, $3.32. Keep in mind that a weekly bullish engulfing line and a weekly bullish KaseCD divergence confirmed off of the $2.738 swing low are still intact and signal that a reversal may be underway.
However, for the near-term, the pullback from $3.168 warns that prices may continue to consolidate and remain in an accumulation phase before closing above $3.15 and making the push to fulfill the next major target at $3.32. There is a good chance for a test of the 38 percent retracement of the rise from $2.869 at $3.05 first. Falling below this will call for the 50 percent retracement at $3.02 and possibly a test of key near-term support at $2.97. The $2.97 level has become crucial for the next few days because it is in line with the 62 percent retracement from $2.869 and the smaller than target of the wave down from $3.198. Closing below $2.97 will shift the near-term odds in favor of challenging $2.91 and lower.
