Natural Gas Archives - Page 14 of 20 - Kase and Company, Inc.

Last week May natural gas formed a double top at $2.03. The confirmation point for the pattern was $1.837, the swing low between the two peaks of $2.032 and $2.028. May rose above the $2.03 double top, but failed to close over this crucial level on both Monday and Tuesday. This was negative and set the market up for a test of major support.

Today’s close below the $1.925 swing low indicates May should now challenge the $1.837 swing low. A move below this would take out the wave up from $1.731 and significantly dampen the potential for the upward correction to continue. Look for initial support tomorrow at $1.86, the 62 percent retracement from $1.731 to $2.074.

That said, the wave $2.074 – 1.982 – 2.041 met its 1.618 projection at $1.89. Therefore, be mindful of the potential for a small upward correction in early trading tomorrow. Currently, our models show resistance at $2.03 and $2.07. We expect $2.03 to hold.

This is a brief natural gas forecast for the next day or so. Our weekly Natural Gas Commentary is a much more detailed and thorough analysis. If you are interested in learning more, please sign up for a complimentary four-week trial.

By Dean Rogers

Natural gas entered into the injection season a bit earlier than normal, and as a result, prices have settled into a state of flux. It is too soon to say that a long-term bottom has been made, especially for the May contract. However, over the past few days the charts have shown that the upward correction is attempting to extend and that prices could soon rise to levels above $2.00.

May natural gas stalled just below crucial resistance at $2.02 Wednesday morning. This is the 0.618 projection for the wave $1.731 – 2.032 – 1.837. The $2.02 target is key resistance for the near term because a sustained close over this would call for at least $2.14 as the 1.00 projection. At that point, the move up would still be corrective longer term, but would most likely confirm that a bottom has been made through at least the summer months.

A normal pullback of the recent move up from $2.837 should hold $1.95. This is the 38 percent retracement from $1.837 to $2.015. However, the daily evening star setup that is formed on Wednesday indicates a pullback to $1.90 might take place. For the move up to continue, $1.90 must hold. This is the 62 percent retracement and the 0.618 projection of the wave $2.032 – 1.837 – 2.015. A close below $1.90 would shift odds in favor of a decline to $1.82 and lower.

By Dean Rogers

It looks as though the natural gas rally has stalled and that prices will most likely settle into a trading range. The move up had been resilient for the past few weeks, reaching a crucial target at $1.91 and nearly extending to key resistance just above $2.00. However, the lack of a positive shift in underlying fundamentals has put a lid on prices, for now.

April natural gas is poised to test key support at $1.74 ahead of the holiday weekend. Wednesday’s close below $1.80, the 0.168 projection of the wave $1.957 – 1.796 – 1.899, has shifted odds strongly in favor of at least $1.74, the 1.00 projection. This is also the 62 percent retracement of the move up from $1.611 to $1.957. A close below $1.74 would call for $1.68 and very likely $1.65. The latter is the 1.618 projection, 89 percent retracement, and last support protecting the $1.611 low.

Longer-term, the outlook for natural gas remains bearish. However, we do not foresee prices making new lows yet. The most likely scenario, during the first few weeks of injection season, is a trading range between nominally $1.65 and $1.95. This is similar to the type of range seen last year between $2.55 and $2.95.

There is a reasonable chance that prices will test Wednesday’s $1.83 midpoint before declining to $1.74. This is also the 38 percent retracement of the move down from $1.899. A close over $1.83 would call for $1.90 again. This is key resistance because a move above $1.90 would wipe out the wave down from $1.957 and its potential to extend to $1.74 and lower.

The highly anticipated natural gas correction is underway. The wave $1.611 – 1.74 – 1.687 overcame its $1.758 0.618 projection Wednesday morning. The correction should extend to at least $1.81, the 1.00 projection. A close over $1.758 would have increased odds for $1.81. Nonetheless, as long as the $1.687 swing low holds on a closing basis the move up should extend.

NGJ6 20160309

$1.81 connects to $1.86 as the 1.382 projection and 38 percent retracement of the decline from $2.223 to $1.611. $1.86 is a potential stalling point due to its confluence. A close over $1.86 would call for $1.91, the 1.618 projection and 50 percent retracement.

NGJ6 Table 20160309

Key resistance is $2.00, the 62 percent retracement. As discussed in the weekly commentary, we doubt prices will overcome $2.00 without a bullish shift in underlying fundamentals.

Key support is $1.68 because it is the 62 percent retracement of the move up from $1.611 and in line with the $1.687 swing low. A close below this would indicate the upward correction may be complete and would significantly dampen odds for $1.81 and higher.

By Dean Rogers

Key resistance is $2.00, the 62 percent retracement. As discussed in the weekly commentary, we doubt prices will overcome $2.00 without a bullish shift in underlying fundamentals.

By Dean Rogers

Forecasts for freezing temperatures this weekend in the eastern U.S. have had a minimal impact on natural gas prices this week. Many traders are looking ahead to above normal temperatures in coming weeks. In addition, many speculate that Thursday’s EIA Natural Gas Storage Report will reflect the smallest withdrawal from storage for this time of year since 2012.

The negative sentiment is being reflected on the charts too. March natural gas is continuing to grind its way lower to targets below $2.00. Monday’s gap from $2.076 stalled at $2.172 and was quickly filled on Tuesday. Subsequently prices have fallen to $2.017 so far.

The move down will likely continue to be a grind. March has struggled to close below the psychologically important $2.00 level in recent weeks. That said, prices should fulfill targets below $2.00 as the waves down from $2.493 and $2.315 project to $1.95 and $1.90. We expect that these projections will be met before another significant correction takes place.

Look for resistance at $2.10 and $2.18. The latter is key because it is the 62 percent retracement from $2.315 to $1.954 and is in line with the $2.172 swing high.

By Dean Rogers

Many have already thrown in the towel on the prospects of a continued winter rally for natural gas. The negative sentiment was reflected on the charts earlier this week when prices plummeted from $2.315 after breaking higher out of the recent trading range between $2.08 and approximately $2.20. Trading will likely remain volatile, and yes, we should see a few more tests of resistance (as soon as tomorrow) as shifting weather reports predict potential cold spells in coming weeks. However, for now, and for the foreseeable future, this is still a bear market.

The majority of technical factors are negative and March natural gas finally closed below $2.08 support on Tuesday. Ultimately, the decline is poised to continue to at least $1.91. This is near the 1.00 projection of the wave $2.493 – 2.08 – 2.315, and is in line with the $1.91 contract low. First support is $1.99, and a close below this would indicate today’s small upward correction is over.

That said, there are a few factors that indicate today’s correction could extend before prices fall to $1.90. The psychologically important $2.00 level has held on a closing basis, and today’s price action formed a bullish Harami line and star setup on the daily chart. Resistance at $2.10, and maybe $2.18 could be tested first, though we expect the latter to hold.

By Dean Rogers

Natural gas fell back into the trading range between $2.23 and $2.39 where it spent the first week of the new year. This comes after the failure to extend to the 0.618 projection of the wave $1.802 – 2.386 – 2.188. There is still an outside chance the move up will extend to $2.56 while $2.188 holds, but overall, the charts do not look good and odds favor a decline to test major support.

The move down from $2.495 broke down into five waves that terminated near $2.241. Today’s small move up to $2.323 was the type of three-wave correction that would be expected after a five-wave pattern. This keeps short-term odds in favor of the decline below key support at $2.23. Upon a close below $2.23 look for $2.17, the 0.618 projection of the wave $2.495 – 2.241 – 2.323. This then connects to $2.07 as the 1.00 projection. These are also the 50 and 62 percent retracements of the move up from $1.802 to $2.495, respectively.

Today’s Harami line and star setup is positive, but the star’s blow-off high dampens the likelihood of a turn higher tomorrow. A surprise bullish withdrawal reported by the EIA tomorrow morning could push prices higher, but based upon the price action for the past few days it looks as though most market participants expect the decline to continue.

By Dean Rogers

There is little doubt that the lack of demand for natural gas as a heating fuel this winter is taking its toll on prices. The market still looks and feels desperate to push higher, but fundamental and technical factors are working against this scenario. There is an outside chance prices could rally by another 10 to 15 cents on a close over $2.39, but we do not expect the move up to last much longer without a significant boost from external factors. In other words, it is going to have to get really cold, really soon, in key areas of the U.S., and last for several consecutive weeks for the move up to continue to any significant degree.

The move up from fresh 16 year lows stalled at $2.39 on December 29 and has subsequently oscillated in a narrowing range. A coil, or possibly an ascending triangle, has formed, and prices briefly broke lower out of the formation before Wednesday’s settlement. The formation indicates a breakout should take place very soon as the pattern nears its apex. The key levels to watch are $2.26 and $2.39.

Odds favor a break lower due to KaseX’s bearish turn signal (purple arrow) on the 3.5-cent Kase Bar chart. A close below $2.26 would call for $2.17 and $2.09.

As stated, there is a modest chance that prices could rally 10-15 cents on a close over $2.39. However, even if this is the case, we do not expect prices to overcome $2.55 given current circumstances.

By Dean Rogers

Evolving weather models that had previously predicted a cold spell in the Northeast U.S. and in the Great Lakes region are reportedly now forecasting above normal temperatures in early January. This could dampen the likelihood of a further price rally for natural gas in coming weeks, and the charts tend to agree.

Today’s decline was quite negative for the near-term outlook, and $2.16 is an important target that should be tested in coming days. This is near the 0.618 projection of the wave down from $2.386 and the 38 percent retracement of the move up from $1.80. A close below $2.16 would call for $2.09 and $2.03.

That said, this is a tough call right now because the market still seems desperate to rally after recently falling to 16 year lows. Wednesday’s decline could be a correction of the move up as prices attempt to extend toward a highly confluent $2.51 level. The late rally in trading after hours on Wednesday indicates $2.31 and even $2.37 might be tested in early trading ahead of Thursday’s EIA Natural Gas Storage report. We expect $2.37 will hold.

It is a bit early to call for a trading range, but we get the sense that is the most likely scenario for natural gas in coming weeks. The boundaries of the range could be quite wide, between approximately $2.03 and $2.37. Trading over the next few days should give us a better sense of what is in store for natural gas prices in early 2016.

Natural Gas Forecast: Rally Fails to Close Over $2.03

Tag: Natural Gas