Natural Gas Price Futures (NG) Technical Analysis – Potential Breakout Over $2.401 but Needs Broad-Based Heat to Sustain Rally

Natural gas futures closed higher on Friday as investors turned their attention to the weather models. The recovery in the market also suggests that Thursday’s surprise sell-off to potentially bullish government storage data may have been overdone.

Friday’s price action suggests some speculative buyers may be betting on the return of hotter temperatures after June 20, but so far the data is indicating only regionally strong demand. The news at the end of the week was not exciting enough to shake the stronger shorts out of the market.

On Friday, August natural gas futures settled at $2.381, up $0.059 or +2.54%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $2.305 will signal a resumption of the downtrend. The market is in no position to change the main trend to up, but there is room for a 50% to 61.8% retracement of the recent break from $2.745.

The minor trend is also down. A trade through $2.401 will change the minor trend to up. This will also shift momentum to the upside. The new minor bottom is $2.317.

The minor range is $2.305 to $2.401. Its 50% level or pivot at $2.353 is important to the structure of the developing chart pattern. Closing above this level is generating a slight upside bias.

The main range is $2.745 to $2.305. Its retracement zone at $2.525 to $2.577 is the primary upside target.

Daily Swing Chart Technical Forecast

Based on Friday’s price action and the close at $2.381, the direction of the August natural gas futures contract on Monday is likely to be determined by trader reaction to the minor pivot at $2.353.

Bullish Scenario

A sustained move over $2.353 will indicate the presence of buyers. If this move generates enough upside momentum then look for a move into $2.401. Taking out this level will change the minor trend to up. This could trigger an acceleration to the upside with the 50% level at $2.525 the minimum upside target.

Bearish Scenario

A sustained move under $2.353 will signal the presence of sellers. This could lead to a retest of the minor bottom at $2.317, followed by the main bottom at $2.305.

Overview

We may see some technical buying due to the friendly government report from Thursday, but upside momentum is likely to be muted unless the weather turns hot over a broad area.