Natural Gas Technical Analysis and Near-Term Outlook
Natural gas held major support at $2.43 and today’s move up implies that a larger test of resistance should take place tomorrow. The move up is still considered to be corrective of the recent decline and must settle above $2.67 to state that the move down might be complete. Natural gas will have to settle above $2.78 to reestablish a firm bullish outlook. Such a move is doubtful without a significant boost from external factors.
Near-term odds favor at least $2.60 and likely $2.67. These are the smaller than (0.618) and equal to (1.00) targets of the primary wave up from $2.425. The $2.67 objective is also near the 38 percent retracement of the decline from $3.002 and is Tuesday’s midpoint. Settling above this would suggest that the move down is complete. However, as stated above, November natural gas will have to settle above $2.78 to confirm a bullish outlook.
With that said, the overarching bias remains bearish due to Tuesday’s decline and the large seasonal rollover gap on the continuation chart. Even so, $2.43 is major support that could form a bullish base because it is the equal to target of the wave down from $3.002, the 62 percent retracement of the rise from $2.072, and the 200-day moving average. Therefore, while $2.43 holds, near-term odds will continue to favor a larger test of resistance.
Should natural gas take out $2.48 early tomorrow look for another test of $2.43. Settling below this will call for a much more significant move down before stalling again.
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