January natural gas rose to $4.614 and closed above key resistance at $4.58 on Wednesday. A sustained close above $4.58 is necessary to confirm that the move up is going to continue in the near term. The technicals indicate that prices are poised to continue to at least $4.66 tomorrow before the EIA stats are released. A close over this would in turn call for $4.83 and higher.

Given the recent choppiness, a correction may take place first, but $4.46 and no lower than $4.33 is expected to hold. The outlook does not become negative again for the near term until there is a close below $4.14.

Retracements
The retracements of the move down from $5.468 to $3.853 confirm resistance at $4.66 as the 50% retracement and $4.83 as the 62% retracement. The retracements in addition to the wave analysis, which shows $4.83 as the next major resistance target, confirms that upon a close over $4.83 the outlook will become much more positive for the near term.

The $4.46 level is the 21% retracement from $3.853 to $4.614 and $4.33 is the 38% retracement. Again, $4.46 and now lower than $4.33 is expected to hold, but $4.14 is key to a continuation higher soon because it is the 62% retracement. A close below this would call for a likely move below $4.00 again, which is not expected for now.

Intraday Moving Average Table
The 5-day (weekly) and 21-period moving average on the 240-minute chart confirms $4.46 as first support. Support around $4.26 is the 21-day (monthly) moving average.

Candlestick Review
The daily candlesticks are positive because Wednesday’s rise to $4.614 negated a bearish dark cloud cover that formed on Tuesday. The midpoint of Wednesday’s candlestick is just above $4.46 support at $4.50 and the confirmation point is around $4.40. A close below these levels would indicate that a substantial correction of the move up was underway.

 

Review of Momentum Status
The momentum indicators on the 6-cent KaseBar chart show that there is a divergence setup. This is because prices have continued to rise while momentum has degraded. This is an indication that a correction of the up move may take place soon, but a swing high in price and momentum is necessary to confirm such a turn.

So, look for the move up to continue to at least $4.66 before the EIA stats are released with a likely move to $4.83 in the near term. A correction is allowable but $4.46 and no lower than $4.33 is expected to hold.

Kase and Company, Inc.

Kase Comments has been provided to you by Kase and Company, Inc. CTA. Written by Dean Rogers AP and edited by Cynthia Kase, CMT, MFTA. See www.kaseco.com or contact Dean Rogers at 505-237-1600 for further information or a free trial of Kase’s weekly technical forecast. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Kase and Company, Inc. Kase and Company, Inc. work products including, but not limited to, reports, comments, forecasts, analysis, and screenshots whether oral or written are “publications” and are not to be construed in any way as “consulting”. Screenshots created with TradeStation.  ©TradeStation Technologies, Inc.  All rights reserved.

The daily commentaries provide a recap of each product's traded price activity, an analysis of the factors that influenced price activity, a recap of any reports released that day, and a look ahead at the next day's schedule. CME Group provides market commentaries for corn, wheat, soybeans, gold, silver, FX, equity indexes and regional market updates.

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

The daily commentaries provide a recap of each product's traded price activity, an analysis of the factors that influenced price activity, a recap of any reports released that day, and a look ahead at the next day's schedule. CME Group provides market commentaries for corn, wheat, soybeans, gold, silver, FX, equity indexes and regional market updates.  

The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.