Natural Gas Price Fundamental Daily Forecast – Set-up For Pull-Back into $3.151 to $3.111

Natural gas prices retreated on Monday as investors cashed in following last week’s sharp rally amid calls for average to above-average temperatures over the near-term.

January Natural Gas futures settled at $3.262, down $0.044 or -1.33%.

Forecast

If traders are actually following the weather then we could see another 1 to 2 days of weakness before the market turns around.

Monday’s technical closing price reversal top is a bearish signal, but it doesn’t mean the trend is turning down. All it means is that momentum is shifting to the downside.

The first rally from any major bottom is usually short-covering. This is typically followed by a 50% to 61.8% retracement of the rally. It’s on this break that the real buyers come in.

The main range is $2.983 to $3.321. Its retracement zone is $3.151 to $3.111. This is our primary downside target. If this market is ready to turn bullish then buyers should step in on a test of this zone.

As far as the weather is concerned, look for a mild weather system to track across the East the next few days. The central and southern U.S. should also see relatively warmer temperatures.

A strong weather system with subfreezing temperatures will track across the Midwest and NE late this week and next weekend for another round of stronger demand.

Looking ahead to Thursday’s storage report, traders are looking for a draw of about 9 billion cubic feet (bcf) in the week-ended November 10.

That compares with a gain of 15 bcf in the preceding week, a build of 30 bcf a year earlier and a five-year average rise of 12 bcf.

Bullish investors should play for a pullback into the value zone identified as $3.151 to $3.111.