Natural Gas Price Futures (NG) Technical Analysis – Looking for Counter-Trend Buyers on Break into $2.274 to $2.222

Natural gas futures posted a potentially bearish closing price reversal top on Friday after the buying dried up following the previous session’s friendly U.S. government weekly storage report. After a steady climb throughout the week in anticipation of above average temperatures the next 7 to 10 days, profit-takers came in on Friday to drive prices lower as the developing bullish weather forecast began to weaken.

Traders are saying that the presence of El Nino is helping to prevent a “locked in” heat system from developing over the key demand areas. Until there is sustained heat over a wide area, it’s going to be hard to create a strong rally.

On Friday, August natural gas settled at $2.308, down $0.016 or +0.69%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $2.413 will change the main trend to up. A move through $2.134 will signal a resumption of the downtrend. The minor trend is also down.

Taking out the closing price reversal top at $2.364 will change momentum to the upside, while a drive through $2.300 will signal the return of sellers.

The main range is $2.745 to $2.134. If the main trend changes to up then look for the rally to continue into its retracement zone at $2.440 to $2.512. Short-sellers could reemerge on a test of this zone. Overtaking it will mean the buying is getting stronger.

The intermediate range is $2.413 to $2.134. Its 50% level at $2.274 is the first downside target. The short-term range is $2.134 to $2.364. Its retracement zone at $2.249 to $2.222 is the next downside target. Buyers would have to form a secondary higher bottom on a test of these zones if there is any chance of a near-term rally.

The minor range is $2.364 to $2.300. Its 50% level or pivot at $2.332 could control the direction of the market on Monday.

Daily Swing Chart Technical Forecast

Based on Friday’s close at $2.308, the direction of the August natural gas futures contract on Monday will likely be determined by trader reaction to the pivot at $2.332.

Bullish Scenario

A sustained move over $2.332 will indicate the presence of buyers. The first target is $2.364. This is a potential trigger point for an acceleration to the upside with the next targets coming in at $2.413 and $2.440.

Bearish Scenario

A sustained move under $2.332 will signal the presence of sellers. The first downside target is $2.300. This is followed by a series of retracement levels at $2.274, $2.249 and $2.222. Aggressive counter-trend buyers could come in on a test of these levels. They will be trying to produce a secondary higher bottom.

Look for a potential acceleration to the downside if $2.222 fails as support.