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James Hyerczyk
Natural Gas

Natural gas futures finished higher on Friday, following through to the upside and confirming the previous session’s potentially bullish closing price reversal bottom. The price action suggests the buying may be greater than the selling at current price levels due to emerging concerns over the possible return of hot temperatures the first week of June.

On Friday, July natural gas futures settled at $2.611, up $0.019 or +0.73%.

Aggressive counter-trend buyers may have come in to defend a pair of main bottoms at $2.550 and $2.534, but still face a wall of resistance from a series of retracement levels.

Daily July Natural Gas

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum shifted to the upside on Thursday with the formation of the closing price reversal bottom and the subsequent confirmation of the chart pattern on Friday. This could lead to a 2 to 3 day counter-trend rally.

A trade through $2.554 will negate the closing price reversal bottom and signal a resumption of the downtrend with main bottom targets coming in at $2.550, $2.534 and $2.510.

The main range is $2.824 to $2.534. Its retracement zone at $2.679 to $2.713 is the main resistance zone. It stopped the rally on May 20.

Other retracement level resistance is layered at $2.609 and $2.619, followed by a pair of 50% levels at $2.632 and $2.641. The resistance then jumps to $2.679.


Daily Swing Chart Technical Forecast

Based on Friday’s close at $2.611, the direction of the July natural gas futures contract is likely to be determined by trader reaction to the Fibonacci level at $2.609.

Bullish Scenario

A sustained move over $2.609 will indicate the presence of buyers. This could trigger a labored rally through the retracement levels at $2.619, $2.632 and $2.641. The rally will begin to expand over $2.641 with potential targets at $2.663 and $2.679. Momentum will then accelerate over $2.679 with the next targets $2.713 and the main top at $2.731.

Bearish Scenario

A sustained move under $2.609 will signal the presence of sellers. If the move creates enough downside momentum then look for a potential retest of the bottoms at $2.554, $2.550 and $2.534.

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