Natural Gas Price Futures (NG) Technical Analysis – Weekly Chart Weakens Under $2.655, Strengthens Over $2.706

Natural gas futures finished lower last week and headed toward the lower half of its more than year-long trading range as traders put to bed this year’s heating season and prepared for the start of the injection season.

Warmer temperatures are forecast for the first two weeks of April which should put pressure on demand. This, along with record production should help to fill in the storage deficit, which currently stands at 285 Bcf (20.5%) below last year’s stocks and 551 Bcf (33.2%) below the five-year average, according to the U.S. Energy Information Administration.

You can also see from the chart that prices plunged from mid-March 2018 to mid-May 2018 before beginning the cooling season rally. Given this year’s storage deficit, we could see a similar pattern develop.

Last week, May Natural Gas futures settled at $2.662, down $0.105 or -3.79%.

Weekly Swing Chart Technical Analysis

The main trend is up according to the weekly swing chart. However, momentum is trending lower. A trade through $2.592 will change the main trend to down. A move through $2.897 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum.

The main range is $2.489 to $2.923. Its retracement zone at $2.706 to $2.655 is currently being tested.

The minor range is $2.592 to $2.897. Its 50% level or pivot at $2.744 could develop into resistance.

Weekly Swing Chart Technical Forecast

Based on last week’s close at $2.662, the direction of the May Natural Gas futures contract this week is likely to be determined by trader reaction to the main Fibonacci level at $2.655.

Bullish Scenario

A sustained move over $2.655 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the main 50% level at $2.706. We could see sellers on the first test of this level, but if it is taken out then look for the rally to possibly extend into the minor 50% level at $2.744.

Bearish Scenario

A sustained move under $2.655 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the pair of main bottoms at $2.592 and $2.579.

We’re not too worried about the downside because we believe the fundamentals are bearish. However, we anticipate periodic short-covering rallies into resistance. These should be looked at as shorting opportunities.