Natural Gas Price Futures (NG) Technical Analysis – Trade Through $1.856 Shifts Momentum to Upside
Natural gas futures touched a multi-year low on Friday before ending higher for the session. Indications of a tightening supply/demand balance chased away some of the weaker shorts, leading to the formation of a potentially bullish closing price reversal bottom chart pattern.
The tightening supply/demand balance may be enough to slow down or even stop the selling pressure, but it’s going to take a dramatic shift in the weather pattern to trigger the start of a strong short-covering rally. Given the massive amount of shorts in the market, this may be the spark needed to start meaningful short-squeeze.
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On Friday, March natural gas futures settled at $1.841, up $0.012 or +0.66%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Friday when sellers took out the previous session low at $1.815.
A move through $1.812 on Monday will signal a resumption of the downtrend. The main trend will change to up on a trade through the January 14 main top at $2.204.
A change in trend to up is highly unlikely on Monday, but Friday’s closing price reversal bottom could be signaling an imminent shift in momentum.
A trade through $1.856 will confirm the closing price reversal bottom. This could trigger the start of a 2 to 3 day counter-trend rally.
The minor range is $1.963 to $1.812. Its 50% level at $1.888 is the first upside target.
The main range is $2.204 to $1.812. Its retracement zone at $2.008 to $2.054 is the second upside target.
Daily Swing Chart Technical Forecast
Based on Friday’s price action and the close at $1.841, the direction of the March natural gas futures contract on Monday is likely to be determined by trader reaction to $1.856.
Bullish Scenario
Taking out $1.856 will confirm the closing price reversal bottom. This could trigger a quick rally into the pivot at $1.888. Overtaking this level will indicate the buying is getting stronger with the next target a gap at $1.963 to $1.977.
Overtaking $1.977 could trigger an acceleration into the short-term retracement zone at $2.008 to $2.054.
Bearish Scenario
Taking out $1.812 will negate the closing price reversal bottom. This will signal the absence of buyers or increased selling pressure. There is no downside objective at this time, but $1.65 is a long-term target.