Natural Gas (UNG): Forecast Higher

It may get busy in the coming week for natural gas. The hurricane is past … moving inland and dissipating

Damage assessments are, or will come in and production conditions clarified.

That itself may result in a lower open on Monday.  However, this time is not like last time.

The charts of UNG have an interesting correlation to last year at the same time. 

Almost to the day (10/11, vs. 10/2), price action penetrated support and rebounded. 

Click here for expandable version of the charts.

The first “We are here” arrow shows the rebound, after penetration pushed past the prior week’s high.  Just like this time as seen on the “We are here … Part 2”.

Looking back:

The initial lows (August for 2019, June for 2020), the percentage gain on the first leg up for 2020 is twice that, 64%, vs. 32%, of 2019. 

That’s a huge difference; indicating something else, possibly a major move higher is about to happen.

Wyckoff said over a century ago, that ‘somebody always knows something’ and that something is reflected in the chart.

We could have a major unexpected event that interrupts or destroys production and/or distribution.  Like an earthquake in the New Madrid Zone.

A major earthquake in the Midwest has never happened in recent history. 

However, reported here, there’s substantial evidence that something seismic on a big scale is a probability.

In fact, increased seismic events are clustering around the west (WA, OR, CA), Midwest and all the way up to Pennsylvania.  These events are happening now.

If at present, there are minor quakes in this area relieving the Craton Plate tensions with no major quake coming, we still have the possibility of a brutal winter with unprecedented cold.

Either way, the second chart of UNG shows a trading channel in the works. If it remains in-effect, UNG may reach the 20 – 26 area by January 2021.

Look for a lower open on Monday that may be temporary (not advice, not a recommendation).

Note:  An update to the analysis is planned after the futures markets open later today, Sunday.

Update: 9:16 p.m. EST

Instead of opening lower, the nat-gas futures NXG20 (November contract) is currently trading up about 6% in the overnight session.

The weekly chart of UNG has been updated with a black bar to show an equivalent move. Note the bar is at or near resistance from three weeks ago.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.
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