October natural gas futures closed higher last week after a spike to the upside turned the minor trend to up on the weekly swing chart. A trade through $2.990 will reaffirm the minor trend to the upside. Taking out the swing bottom at $2.668 will change the minor trend to down.
The short-term range is $3.420 to $2.668. Its retracement zone at $3.044 to $3.133 is the primary upside target. With the main trend down, bearish traders are likely to sell an initial rally into the zone. Overtaking the upper, or 61.8% level, at $3.133 could indicate the presence of buyers. This could trigger an acceleration to the upside, with the first key target the swing top at $3.420.
A trade through $3.420 will change the main trend to up. The initial move through this level could create the momentum needed to challenge the long-term 52-week moving average at $3.510 and the long-term retracement zone at $3.564 to $3.775.
On the downside, the minor range is $2.668 to $2.990. Fifty percent of this range at $2.829 is a key downside target. If this market is going to move higher, new buyers may have to step in on a test of this level in order to fuel a reversal to the upside.
What to Watch
Thursday’s storage report for the week ended August 28 lands the same week the Hugh Brinson pipeline goes live. Freeport just came back. Corpus Christi just came back. Combined feedgas is running at the highest level since April. All of that happened at once and the market still could not hold $3.00 on Thursday. Friday gave it right back. The supply side is not waiting.
The minor trend flipped up last week but the main trend has not turned. A push above $3.00 runs straight into the retracement zone. The market held $2.829 on the last pullback and that is the level that matters if sellers come back this week.
More Information in our Economic Calendar.