Short-Term Natural Gas Forecast – January 31, 2018

The conviction of today’s natural gas price decline reflects the market’s disappointment with external factors. The confirmation of yesterday’s shooting star and bearish divergences do not indicate the move up is over, but significantly dampen the odds for March to rise to the levels that February achieved before its expiration.

The near-term outlook has shifted to negative and calls for a test of at least $2.91 tomorrow. This is near the 50 percent retracement of the move up from $2.532, the 62 percent retracement from $2.693, and the $2.905 and $2.907 swing lows. Settling below this will open the way for key support at $2.81, the 62 percent retracement of the rise from $2.532.

March 2018 Natural Gas - Daily
March 2018 Natural Gas – Daily

That said, although the decline from $3.259 has been aggressive, there is no well-developed wave structure yet. So far, the move down has retraced just over 38 percent of the move up from $2.532. Therefore, an upward correction of the decline from $2.532 should take place before prices fall below $2.91. Such a correction is expected to hold today’s $3.08 midpoint, which is also the 38 percent retracement of the decline from $3.259. Settling above $3.08 would call for a test of $3.14 and possibly higher before the end of the week.

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.

Published by

Dean Rogers, CMT

Dean Rogers, CMT is the general manager of the Kase Call Center in Albuquerque, New Mexico. He oversees all of Kase and Company, Inc.’s operations including research and development, marketing, and client support. Dean began his career with Kase in early 2001 as a programmer but has developed into Kase’s senior technical analyst. He writes Kase’s award-winning weekly Crude Oil, Natural Gas, and Metals Commentaries. He is an instructor at Kase's classes and webinars and provides all of the necessary training and support for Kase's hedging models and trading indicators for both retail and institutional traders.

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