Natural Gas Price Futures (NG) Technical Analysis – Strengthens Over $2.435, Weakens Under $2.428

Natural gas futures strengthened on Friday as traders dealt with uncertainties ahead of the landfall of Tropical Storm Barry. Although prices edged higher, the price action was actually being affected by concerns over the impact on both supply and demand.

The impact on production was already being felt throughout the week when the shutdown of platforms in the Gulf of Mexico drove prices higher. Demand is being affected because with the storm comes cooler temperatures. However, after the storm leaves another wave of heat is expected.

On Friday, September natural gas futures settled at $2.434, up $0.033 or +1.37%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through $2.476 will signal a resumption of the uptrend. The next potential upside target is the main top at $2.741.

A trade through $2.115 will change the main trend to down. This is highly unlikely, however, due to the 15 day rally, the market is in the window of time for a potentially bearish closing price reversal top.

The short-term range is $2.115 to $2.476. Its retracement zone at $2.296 to $2.253 is potential support.

The intermediate range is $2.741 to $2.115. Its retracement zone at $2.428 to $2.502 is acting like resistance. It is currently being tested. The near-term direction of the market is likely to be determined by trader reaction to this retracement area.

The main range is $2.990 to $2.115. Its retracement zone at $2.552 to $2.656 is the primary upside target. This zone is controlling the longer-term direction of the market.

Daily Technical Forecast

Based on Friday’s price action and the close at $2.434, the direction of the September natural gas futures contract is likely to be determined by trader reaction to the uptrending Gann angle at $2.435 and the intermediate 50% level at $2.428.

Bullish Scenario

A sustained move over $2.435 will indicate the presence of buyers. If this move creates enough upside momentum then look for a test of last week’s high at $2.476. This is followed by the intermediate Fibonacci level at $2.502.

Taking out $2.502 could trigger an acceleration to the upside with the next target the main 50% level at $2.552. This is followed by a downtrending Gann angle at $2.585. This is another potential trigger point for an upside breakout.

Bearish Scenario

A sustained move under $2.428 will signal the return of sellers. The daily chart is wide open under this level with the next target the short-term 50% level at $2.296. Be careful if your long and sellers start to take out $2.428.