Natural Gas (NG) Technical Analysis – Strengthens Over $2.440, Weakens Under $2.368
Based on the price action and the close at $2.404, the direction of the November natural gas futures contract on Monday is likely to be determined by trader reaction to the main Fibonacci level at $2.368.
Petrotahlil :Natural gas futures tumbled on Friday as traders continued to digest the surprisingly bearish government storage report from the previous session. The U.S. Energy Information Administration on Thursday reported a 102 Bcf weekly injection into natural gas storage that came in well above consensus estimates. The report suggests that production is running substantially higher than published forecasts.
Last week, November natural gas settled at $2.404, down $0.039 or -1.60%.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The nearest main bottom is $2.185, which gives the market plenty of room to break further.
The main trend will change to up on a trade through $2.745. This is extremely unlikely. However, with the market down eight sessions since its last main top, it is inside the window of time for a closing price reversal bottom. If you’re short or have a tendency to be a speculative buyer then this is the pattern you have to be looking for, especially since the market is testing a key retracement zone.
Don’t get me wrong, the trend is your friend, but if you see a failure to follow-through to the downside then a higher close, don’t be surprised by 2 to 3 days of short-covering.
The minor trend is also down. A trade through $2.562 will change the minor trend to up. This will shift momentum to the upside.
The main range is $2.135 to $2.745. Its retracement zone at $2.440 to $2.368 is currently being tested.
The major resistance is a retracement zone at $2.585 to $2.691.
Daily Swing Chart Technical Forecast
Based on the price action and the close at $2.404, the direction of the November natural gas futures contract on Monday is likely to be determined by trader reaction to the main Fibonacci level at $2.368.
Bearish Scenario
A sustained move under $2.368 will indicate the presence of sellers. The daily chart is wide open to the downside until $2.185 to $2.135 so taking out $2.368 could trigger an acceleration to the downside.
Bullish Scenario
A sustained move over $2.440 will signal the presence of buyers. This could trigger a counter-trend short-covering rally, but I don’t think it will take out $2.562 to $2.617.
Also watch the price action under Friday’s low at $2.380. If this is taken out and the market turns higher, a closing price reversal bottom could form.
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