Natural Gas Price Update – Strengthens Over $4.557, Weakens Under $4.431

Natural gas futures rallied on Wednesday after weather forecasters noted colder medium-range trends that encouraged bearish traders to cover positions and speculative traders to re-establish long positions. Bullish traders were also influenced as the front month December futures contract expired. Additionally, Bespoke Weather Services attributed some of the gains earlier Wednesday to a change in overnight weather data that had increased heating demand expectations and strong gains in the physical market.

Traders are now waiting for this week’s Energy Information Administration (EIA) storage report, due Thursday. Current estimates showed market participants are expecting a larger-than-average withdrawal for the week-ended November 23. The consensus shows investors are looking for a 76 Bcf withdrawal.

At 0624 GMT, January Natural Gas futures are trading $4.561, down $0.138 or -2.94%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $4.964 will signal a resumption of the uptrend. The main trend will change to down on a move through $3.199. The storage deficit continues to support the uptrend, however, traders are closely watching the weather, demand and production.

The minor trend is down. A trade through $4.038 will reaffirm the minor trend. A move through $3.898 will be further confirmation of the minor trend. A move through $4.875 will change the minor trend to up. This will shift momentum to the upside.

The main range is $3.199 to $4.964. Its retracement zone at $4.082 to $3.873 is major support. This zone stopped the selling on November 15 at $3.898 and on November 26 at $4.038.

The minor range is $4.964 to $3.898. Its retracement zone at $4.431 to $4.557 was acting like resistance until yesterday. Now it’s trading on the strong side of this zone, giving it a slight upside bias.

Daily Swing Chart Technical Forecast

Based on Wednesday’s close and the earlier price action, the direction of the January Natural gas futures contract on Thursday is likely to be determined by trader reaction to the short-term Fibonacci level at $4.557.

Bullish Scenario

A sustained move over $4.557 will indicate the presence of buyers. If this move can generate enough upside momentum then buyers should easily take out yesterday’s high at $4.728. This could lead to a test of minor tops at $4.875 and $4.964.

Bearish Scenario

A sustained move under $4.557 will be the first sign of weakness. This could lead to a quick test of the 50% level at $4.431. This price is the trigger point for an acceleration to the downside with the next target the main 50% level at $4.082, followed by minor bottoms at $4.038 and $3.898. The last major support is the main Fibonacci level at $3.873.