Analyzing Natural Gas Trends: Resistance Levels and Potential Path Ahead

Natural Gas Forecast Video for 04.09.23 by Bruce Powers

Natural gas reached a possible short-term resistance level yesterday with a trend high of 2.865. Today, it takes a rest following four days of higher daily highs and higher lows and trades inside yesterday’s range. The chance for a further retracement exists and today’s candlestick pattern is on track to complete a bearish inverted hammer candlestick pattern. Nevertheless, a move out of today’s range will signal direction.

Drop Below Today’s Low of 2.735 Signals Short-Term Weakness

A bearish signal on a drop below today’s low of 2.735 increases the chance for a deeper pullback. The previous resistance range will be watched to see if it acts as support during a pullback. It goes from approximately 2.67 down to the 34-Day EMA, which is currently at 2.64. Over the past couple of months, the 34-Day EMA has acted as either support or resistance more than once. Therefore, it would be a stronger indication of underlying demand if support was found above the 34-Day line. Further, the area around the two trendlines, one heading down and one up can be considered as a potential support zone down to where the lines cross at approximately 2.59.

Relative Performance of Current Advance Points to Bullish Continuation

As first noted yesterday, since the 1.946 trend low in April there have been four rallies with the current one being the fifth. The current rally has seen natural gas advance by 18.1% as of yesterday’s 2.865 high. This is weaker performance than seen in the previous four rallies and points to the possibility of a continuation higher. The prior four rallies saw the price of natural gas go up by somewhere between 22.8% to 34.6%.

A Close Above 2.77 Could Signal a Bullish Weekly Close

There remains a chance that natural gas could end the weak at its highest weekly closing price in 10 weeks. It would need to close today above 2.77 to do so. It would provide a minor weekly bullish signal if it can. That may not have an impact in the short-term, but it supports the likelihood for an eventual continuation higher. The recent trend high of 3.018 is the next higher target area if natural gas keeps rising. How it behaves upon approaching that price area will be telling as to whether it can keep going in the near term.

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