Natural Gas Outlook

March Natural Gas is starting to show some signs of life. Recent inventory announcements have given Natural a push in the right direction in the last week, and the long-term outlook is one of possibly countering its previous down-trend.

Looking at both the Weekly and Daily chart of NG H8 will show that we have bottomed out at a Wave 5, with divergence.  We came squarely down on top of the MOB from the Weekly chart, and found our support there. The oscillator is divergent on both charts, and we experienced a nice up-swing as a result.

 

Looking closer at the Daily chart, we see that we are currently showing a 1-2-3 pattern. Examining the properties of this pattern, we notice that 1 and 2 are in odd places, leading us to believe this will not be the final counting of this swing. Recognizing the historic significance of this, we can derive that this could possibly wind up being a larger 1-2-3 pattern, with the current 3 being relabeled as Wave 1. We know that Wave 2, around 75% of the time, is a 50-62% retracement of Wave 1. The swing down after the 3 on this chart is a perfect 62% retracement.

If this is in fact a larger 1-2-3 pattern, we would expect Wave 3 to really kick it into high gear when it surpasses the price of Wave 1. It is at this price level that those who expected another push to new lows, relying on the strength of the previous down trend, would have placed their stops. Once all those stops are taken out, they realize they were wrong, and jump on board to the long side. In order for this larger 1-2-3 pattern to catch fire and gain some steam, we need to clearly break that $8.40 level.

Thursday is another Natural Gas report. I'm not 100% sure what the report will say, but I know that folks in the north are using their fair share of Natural Gas. It was 3 degrees last week when my family and I rolled into Stone Creek, Ohio. It was cold, and they were crankin up the heat...fueled by Natural Gas. That's my report, but I suggest you wait to hear what the OFFICIAL report is on Thursday.

Nate McCartney