Analyzing Natural Gas: Bullish Potential vs. Bearish Risks

Natural Gas Forecast Video for 26.09.23 by Bruce Powers

Natural gas looks to be building up energy before its next move as it continues to consolidate in a relatively narrow range. It is trading inside day for the second day in a row. Today’s price action is contained inside Friday’s range and inside Thursday’s price range. Each of the two-day lows are higher than the prior day’s low, showing strength, and the lows are testing support of an internal blue dotted trendline.

Inside Day Breakout Can Accelerate

Many times, when coming out of an inside day consolidation, price has a chance to accelerate in the direction of the breakout. A decisive move above today’s high of 2.67 shows strengthening, while a breakout above the two-day high of 2.68 further confirms. Since the 2.68 price level is the high for two days instead of one day, it is considered more significant. Upon an upside breakout, natural gas first heads towards Thursday’s high of 2.76, followed by the four-day high at 2.82.

Close Above 2.68 Confirms Strength

Nonetheless, a daily close above 2.68 confirms strength in natural gas and increasing the chance for it to continue to trend higher. In that regard, the key price level is the swing high of 2.87 from September 19. Once that price is exceeded to the upside, the chance for natural gas to continue to strengthen increases. An AB equals CD pattern completes at 2.94, pointing to one target, while an ABCD pattern extended by the 127.2% targets a higher price of 3.06.

Bearish Weekly Candle Triggers Below 2.595

Regardless of the above bullish scenario, a bearish scenario is also possible. Last week natural gas completed a bearish inverted hammer candlestick pattern. It hasn’t triggered yet, but if it does, natural gas might see an acceleration to the downside. The bearish one-week hammer pattern triggers on a decisive decline below last week’s low of 2.595. If that occurs, then how price behaves will be telling. Does it accelerate to the downside or is there not much of a change in downside momentum? Initial downside targets include the three-week low of 2.54, followed by the most recent swing low of 2.50.

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