Natural Gas Price Futures (NG) Technical Analysis – Strengthens Over $3.384, Weakens Under $3.109

Natural gas futures fell on Friday as the forecast for mild temperatures continued to weigh on bullish sentiment. Additionally, sellers took control after the U.S. Energy Information Administration’s weekly storage report came in as expected.

According to the EIA, domestic supplies of natural gas fell by 48 billion cubic feet during the week-ending December 21. Traders were looking for 48-50 Bcf. Total stocks now stand at 2.725 trillion cubic feet, down 623 billion cubic feet from a year ago, and 647 billion below the five-year average, the government said.

On Friday, March natural gas settled at $3.148, down -0.205 or -6.51%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downside momentum temporarily stalled on December 26 with the formation of the closing price reversal bottom. However, the potentially bullish chart pattern was never confirmed.

A trade through $3.109 will negate the closing price reversal bottom and signal a resumption of the downtrend. The main trend will change to up on a move through $3.659.

The short-term range is $3.659 to $3.109. Its 50% level or pivot comes in at $3.384. This is the nearest resistance.

The main range is $2.890 to $4.608. Its retracement zone at $3.546 to $3.749 is the next resistance zone. The main top at $3.659 falls inside this zone.

The intermediate range is $4.608 to $3.109. Its retracement zone at $3.859 to $4.035 is the third resistance area.

Daily Swing Chart Technical Forecast

Based on Friday’s weak close at $3.148, the direction of the March natural gas futures market on Monday is likely to be determined by trader reaction to the closing price reversal bottom at $3.109.

Bullish Scenario

A sustained move over $3.109 will indicate the presence of buyers. They will be coming in to defend the closing price reversal bottom. If successful, this move could generate the upside momentum needed to challenge the short-term pivot at $3.384. Overtaking this level could trigger an acceleration to the upside with the first target the main Fibonacci level at $3.546. This is followed by the main top at $3.659 and the main 50% level at $3.749.

Bearish Scenario

Taking out $3.109 will signal the return of sellers. This move will negate the closing price reversal bottom and reaffirm the downtrend. The next two targets under this level are the November 2 bottom at $2.890 and the September 14 bottom at $2.810.