Natural Gas Price Futures (NG) Technical Analysis – Needs to Take Out $3.659 to Change Trend to Up

Natural gas futures are trading higher early Wednesday, coming back fairly strong after Monday’s steep decline. Weather was not an issue over Christmas which may have been the catalyst driving prices lower the day before the U.S. bank holiday on Tuesday.

In fact, most weather services are calling for national demand to come in on the low side this week. However, there is still some uncertainty about temperatures around the January 4 to January 7 time period. Prices could big up a bid if the forecasts start to show a cooling trend for this time period.

At 0700 GMT, March natural gas is trading $3.332, up $0.071 or +2.18%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. It turned down when sellers took out the previous main bottom at $3.283. However, this downtrend may not last long because the trend will change back to up on a trade through $3.659.

Daily Retracement Levels Technical Analysis

The short-term range is $3.659 to $3.244. Its 50% level or pivot at $3.452 is the initial upside target. This price is essentially controlling the near-term direction of the market.

The main range is $2.890 to $4.608. Its retracement zone at $3.546 to $3.749 is the next upside target.

The intermediate range is $4.608 to $3.244. If the trend changes to up then we’re liking to see a surge back to its retracement zone at $3.926 to $4.087.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the March natural gas futures contract on Wednesday is likely to be determined by trader reaction to Monday’s low at $3.244.

Bullish Scenario

A sustained move over $3.244 will indicate the presence of buyers. If this generates enough upside momentum then look for the rally to extend into the short-term pivot at $3.452. Since the trend is down, we could see sellers re-emerge on a test of this level. Taking it out, however, could trigger a further rally into the main Fibonacci level at $3.546. The market will strengthen over this level with the main top at $3.659 the next target.

Bearish Scenario

A sustained move under $3.244 will signal a resumption of the downtrend. The daily chart shows plenty of room down to $2.890 so don’t be surprised by an acceleration to the downside.

Closing Price Reversal Bottom

Taking out $3.244 then turning higher for the session will indicate the buying is greater than the selling at current price levels. This could fuel an intraday short-covering rally. A close over $3.261, however, will form a closing price reversal bottom on the daily chart. If confirmed, this could trigger the start of a 2 to 3 day counter-trend rally.