Natural Gas Price Futures (NG) Technical Analysis – Strengthens Over $2.552, Weakens Under $2.534

Natural gas futures finished lower on Friday as optimistic long traders finally succumbed to the lack of weather-driven demand and Thursday’s higher-than-expected U.S. Energy Information Administration’s (EIA) weekly storage report.

NatGasWeather said, “Most of the weather data favors a very comfortable pattern across the northern U.S. May 12-18 with highs of 60s to 80s, while the southern U.S. will be warm to slightly hot with 70s to 90s.” They also added, “Upcoming builds will continue to run larger than normal to further improve the supply picture.”

On Friday, June natural gas settled at $2.567, down $0.022 or -0.85%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart; however, momentum has been trending higher since the formation of the closing price reversal bottom at $2.477 on April 25.

The main trend will change to up on trade through $2.626. A move through $2.477 will signal a resumption of the downtrend.

Last week, traders showed respect to a pair of 50% retracement levels.

The main range is $2.768 to $2.477. Its retracement zone resistance is $2.623 to $2.657. Last Wednesday, the market entered this zone but the rally stopped at $2.626 before prices retreated and never returned.

The short-term range is $2.477 to $2.626. Its retracement zone is $2.552 to $2.534. On Friday, the market hit $2.553 before bouncing slightly higher into the close.

Daily Swing Chart Technical Forecast

Based on Friday’s price action, the direction of the June natural gas futures contract on Monday is likely to be determined by trader reaction to the 50% level at $2.552.

Bullish Scenario

A sustained move over $2.552 will indicate the presence of buyers. They are attempting to create a secondary higher bottom that could create enough upside momentum to overcome the 50% level at $2.623 and the main top at $2.626. If they can accomplish this, then look for the rally to extend into the Fibonacci level at $2.657.

Bearish Scenario

A sustained move under $2.552 will signal the presence of sellers. If this creates enough downside momentum then look for a potential break into the Fibonacci level at $2.534. Buyers could continue to come in on a test of this level. If support fails then look for a potential acceleration to the downside with the next target coming in at $2.477.