Natural Gas Price Futures (NG) Technical Analysis – Strengthens Over $3.228, Weakens Under $3.185

Natural gas futures posted a two-sided trade on Friday before closing lower. The market was pressured early in the session by follow-through selling related to Thursday’s larger than expected weekly storage build. Mixed weather forecasts, however, continued to remain a concern as traders seek consistency in the predictions. The short-term forecast is calling for at least two potential cold snaps, while another forecast is calling for milder long-range temperature risks.

On Friday, December Natural Gas settled at $3.225, down $0.031 or -0.96%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on October 22 when sellers took out the previous main bottom at $3.202. It was reaffirmed on Friday when sellers drove the market through main bottoms at $3.183 and $3.161. The next target bottom comes in at $3.047.

The price action is being manipulated by a series of retracement levels. Despite the downtrend, the market has been subject to a few two-sided trading sessions.

The main range is $2.840 to $3.409. Its retracement zone at $3.125 to $3.057 is the primary downside target. Even though the main trend is down, a test of this zone could attract aggressive counter-trend buyers.

The intermediate range is $3.047 to $3.409. Its retracement zone is $3.228 to $3.185. The near-term direction is being controlled by this area.

The short-term range is $3.409 to $3.146. Its 50% level or pivot is $3.278. This level is a potential trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

Based on Friday’s close at $3.225, the direction of the December Natural Gas futures contract is likely to be determined by trader reaction to the intermediate 50% level at $3.228.

Bullish Scenario

A sustained move over $3.228 will signal the presence of buyers. If this creates enough upside momentum then look for a potential spike into $3.278 then $3.314. A trade through $3.314 will change the main trend to up.

Bearish Scenario

A sustained move under $3.228 will indicate the presence of sellers. This could trigger a quick break into the Fibonacci level at $3.185. If this fails then the selling is likely to extend into Friday’s low at $3.146, followed by the main 50% level at $3.125 and the 61.8% level at $3.057.

Zone to Watch for Counter-Trend Buyers

The next key downside target is $3.125 to $3.057 so start watching for value buyers on a test of this zone.