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James Hyerczyk
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Natural Gas

Natural gas futures popped to their highest level since June 3 on Friday as weather turned hotter in key demand areas. The surge in demand outweighed trader concerns over rising gas production. Prices are especially sensitive to any bullish news at this time due to technically oversold conditions and after short-sellers discounted a number of bearish conditions.

On Friday, August natural gas futures settled at $2.418, up $0.128 or +5.59%.

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Daily August Natural Gas

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend turned up on Friday when buyers took out the last swing top at $2.413. A trade through $2.134 will change the main trend to down.

The minor trend is also up. A trade through $2.217 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is $2.745 to $2.134. Its retracement zone at $2.440 to $2.512 is the first upside target and potential resistance. The lower or 50% level of this range was touched on Friday.

The intermediate range is $2.849 to $2.134. Its retracement zone is $2.492 to $2.576. This is also potential resistance.

The main range is $3.003 to $2.134. Its retracement zone is $2.569 to $2.671. This is the last potential resistance are before the main tops at $2.745, $2.849 and $3.003.

Daily Swing Chart Technical Forecast

Based on Friday’s price action, the direction of the August natural gas futures contract on Monday is likely to be determined by trader reaction to the short-term 50% level at $2.440.

Bullish Scenario

A sustained move over $2.440 will indicate the presence of buyers. If this move creates enough upside momentum then look for prices to possibly surge into the resistance clusters at $2.492 to $2.512 or $2.569 to $2.576. The latter is the potential trigger point for an acceleration into the main Fibonacci level at $2.671.

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Bearish Scenario

A sustained move under $2.440 will signal the presence of sellers. If this price holds as resistance then look for a potential pullback into $2.290. Buyers may step in on a break back into this level. They may try to form a secondary higher bottom.

Overview

We’re in a momentum driven weather market so look for heightened volatility. The market is still susceptible to a two-sided trade until buyers can clear $2.745.

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