Advertisement
Advertisement

Natural Gas Price Futures (NG) Technical Analysis – Taking Out $3.089 Targets $3.210 to $3.215 Resistance Cluster

By:
James Hyerczyk
Published: Jan 26, 2019, 10:52 UTC

Based on last week’s price action and the close at $3.072, the direction of the March Natural gas futures contract on Monday is likely to be determined by trader reaction to the intermediate 50% level at $3.089.

Natural Gas

Natural gas futures closed higher on Friday amid forecasts for another Arctic blast over the week-end and into the end of January. Speculators also may have priced in a new forecast calling for another round of frigid temperatures into February. Helping to limit gains was a weak performance in the spot market.

Potentially bullish comments from Bespoke Weather Services were supportive throughout the session. “However, through the week it became clear that the cold shot to close out January and bring in February was the real deal, and also that cold risks can easily return into the middle of February,” Bespoke Weather Services said.

On Friday, March Natural Gas futures settled at $3.072, up $0.074 or +2.47%.

The speculators are probably betting on spot traders being wrong this week-end about the intensity of the cold and that they will have to scramble to make up the extra demand on Monday. Furthermore, the speculators may also be betting on another wave of cold hitting after February 4.

Buyers are being cautious after being burned in December by cold weather forecasts. “Many traders opted to sell now and ask questions later,” Bespoke Weather Services said.

Natural Gas
Daily March Natural Gas

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum has been trending lower since the formation of the closing price reversal top at $3.406 on January 16. A trade through $3.406 will negate the closing price reversal top and signal a resumption of the uptrend.

The price action also suggests that buyers are coming in on the breaks to defend the uptrend, but that they are reluctant to buy strength. There are two main bottoms at $2.809 and $2.771. A trade through these bottoms will change the main trend to down.

The minor trend is also down. This is helping to confirm the shift in momentum. A new minor bottom has formed at $2.897.

The main range is $3.659 to $2.771. Its retracement zone at $3.215 to $3.320 is resistance.

The intermediate range is $2.771 to $3.406. Its retracement zone at $3.089 to $3.014 is currently being tested. It acted like resistance all week.

The new short-term range is $3.406 to $2.897. Its retracement zone at $3.151 to $3.210.

Combining the retracement zones creates a resistance cluster at $3.210 to $3.215. This area will likely control the direction of the market this week.

Daily Swing Chart Technical Forecast

Based on last week’s price action and the close at $3.072, the direction of the March Natural gas futures contract on Monday is likely to be determined by trader reaction to the intermediate 50% level at $3.089.

Bullish Scenario

A sustained move over $3.089 will indicate the presence of buyers. The first target is the short-term 50% level at $3.151. This is followed by the resistance cluster at $3.210 to $3.215. This is the critical area for bullish traders. Overtaking $3.215 could trigger an acceleration to the upside with the first target the main Fibonacci level at $3.320, followed by the main top at $3.406.

Bearish Scenario

A sustained move under $3.089 will signal the presence of sellers. This could lead to a pullback into $3.014. If this fails to attract buyers then look for the selling to extend into last week’s low and the minor bottom at $2.897.

If $2.897 fails then the market is likely to continue to retreat into the main bottoms at $2.809 and $2.771.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement