Natural Gas Price Futures (NG) Technical Analysis – Forecast Change Should Trigger Upside Breakout

Natural gas prices were a little higher on Friday despite a lower than expected storage draw the previous week. The market found support as new forecasts showed colder temperatures creeping into key demand areas during the last two weeks of January. Deficits continue to tighten due to the recent above average temperatures, however, technically, the market appears to be overdue for a short-covering rally.

On Friday, March natural gas futures settled at $2.880, up $0.068 or +2.42%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum may be getting ready to shift to the upside following Thursday’s closing price reversal bottom and subsequent confirmation on Friday.

Officially, the main trend will change to up on a trade through $3.659, however, the daily chart indicates there is room for a 2 to 3 counter-trend rally. A trade through $2.771 will signal a resumption of the downtrend.

The short-term range is $3.659 to $2.771. Its 50% level or pivot at $3.215 is the first upside target.

The main range is $4.608 to $2.771. Its retracement zone is $3.690 to $3.906. This is the next potential upside target.

Daily Technical Forecast

Based on last week’s price action and the close at $2.880, the direction of the March natural gas futures contract on Monday is likely to be determined by trader reaction to the steep downtrending Gann angle at $2.859.

Bullish Scenario

Taking out and sustaining a rally over $2.859 will indicate the presence of buyers. This will be a potentially bullish move because the daily chart indicates there is plenty of room to the upside with the first target the short-term pivot at $3.215.

Since the main trend is down, sellers could come in on a test of this level. Overtaking it will indicate the buying is getting stronger with the next targets a pair of downtrending Gann angles at $3.248 and $3.259.

Bearish Scenario

A sustained move under 2.859 will signal the presence of sellers. If this leads to increased selling pressure then look for a retest of $2.771. A failure at this level will not only negate the closing price reversal bottom, but it will also signal a resumption of the downtrend.