Advertisement
Advertisement
Natural Gas News: Natural Gas Futures Slip—Retracement Zone at $2.880–$2.836 in Play
By:
Key Points:
- Natural gas futures reversed lower after a short-covering rally failed to hold above the $3.065 reversal top.
- Thin holiday trading likely exaggerated Monday’s surge, which lacked institutional participation and conviction.
- Break below $2.929 confirms the reversal and targets the 50%–61.8% retracement zone from $2.880 to $2.836.
Natural Gas Pulls Back After Holiday Spike—Closing Price Reversal Top Pattern in Play
U.S. natural gas futures are trading lower in Monday’s shortened holiday session, retreating after an early surge to the highest level since August 11. The rally, which broke above the August 15 swing high at $3.039, extended the market’s streak of higher highs and higher bottoms to five straight sessions. However, the move lacked volume and conviction, raising questions about its sustainability.
Was the Spike Just Short-Covering in Thin Holiday Trade?
The sharp price jump was likely driven by short-covering and buy-stop triggers in a low-volume environment. With institutional traders largely sidelined for the holiday, the price action appears technically driven rather than fundamentally supported. This sets up a closing price reversal top, a bearish technical pattern that often signals near-term downside.
If the market confirms the reversal with a break below $2.929, it would likely lead to a test of $2.880 to $2.836—representing the 50% and 61.8% retracement levels of the rally from $2.695 to $3.065. Validating this retracement zone would put near-term pressure on bulls to step in and defend key support.
Can Bulls Establish a Higher Bottom to Regain Control?
This retracement zone is a critical test. If buyers can defend the $2.880–$2.836 area and establish a short-term higher bottom, it would strengthen the case for a developing major low. A successful defense here could shift momentum back to the upside and set the stage for a renewed push toward $3.065.
Taking out $3.065 would negate the reversal pattern entirely and could trigger upside momentum toward $3.238—marking a 50% level of the broader downtrend—and the 50-day moving average at $3.300.
Failure at Support Opens the Door to Retest Recent Lows
If $2.836 fails to hold, bearish pressure may intensify, increasing the likelihood of a full retracement back to the $2.695–$2.647 zone. That would erase the recent gains and weaken the outlook for a sustained bottom.
Market Forecast: Bearish Bias with Critical Support in Focus
The near-term setup favors a bearish outlook heading into Tuesday’s full session. A break below $2.929 opens the path to $2.880–$2.836. This zone is pivotal—either holding as a launchpad for a new leg higher or breaking to reexpose the downside toward recent lows.
More Information in our Economic Calendar.
About the Author
James Hyerczykauthor
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.
Advertisement