Natural Gas Price Futures (NG) Technical Analysis – Market Gaps Higher With Buyers Eyeing $3.215
Natural gas futures gapped higher on Monday as investors likely reacted to the weekend’s cold weather and the forecasts calling for the return of colder temperatures January 19-21 and January 24-25. Traders knew there was risk going into the weekend amid uncertainty over how much frigid polar air over Canada would push across the border in the U.S.
At 0121 GMT, March natural gas is trading $3.095, up $0.150 or +5.09%.
At this point in the trading session, we’re going to assume that the European weather model saw the same cold pattern as the GFS model, which would be a bullish development. However, we can’t be certain until we see the updated forecast from NatGasWeather later in the day.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up on Friday when buyers took out the swing top at $2.932. The main trend will change to down on a trade through $2.809.
The short-term range is $3.659 to $2.771. Its retracement zone at $3.215 to $3.320 is the primary upside target.
Today’s gap to the upside and the gap down from December 28 to December 31 has created an island of prices between $3.028 and $2.771.
Daily Technical Forecast
The early price action has created a cluster of support Gann angles at $3.059 to 3.048. Trader reaction to this area will determine the direction of the natural gas market the rest of the session.
A sustained move over $3.059 will indicate that buyers are coming in to defend the uptrend. If this can create enough upside momentum then the market may take a run at the short-term 50% level at $3.315. We could see sellers on the first test of this level. Overcoming it could trigger a further rally into the short-term Fibonacci level at $3.320. This is followed closely by a downtrending Gann angle at $3.359.
A failure to hold $3.048 as support will signal the return of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the next uptrending Gann angle at $2.911.
Keep in mind that this is a short-term move because the weather forecast from January 19 to January 25 consists of cold temperatures, followed by warm temperatures then cold temperatures.
The rally could get stronger depending on how far into the US the cold pushes in from Canada, and how long it stays.