Analyzing Natural Gas: Will the Bearish Trend Persist Amidst Technical Weakness?

Natural Gas Forecast Video for 22.09.23 by Bruce Powers

Natural gas continues to pull back from its 2.87 high from two days ago. Today’s decline took natural gas below the 55-Day EMA (orange) and it continues to fall at the time of this writing. The minor 2.60 swing low is next at risk of being busted to the downside and it certainly looks like a good possibility.

Heading to 78.6% Retracement to 2.58

If natural gas does fall below 2.60 then the 78.6% Fibonacci retracement at 2.58 may be the next lower target. That level will coincide with a small dotted blue trendline that can also be watched as possible support. Further down is the 88.6% Fibonacci retracement at 2.54.

That lower price area would be the maximum anticipated decline not only because it is an extreme retracement level but also because the lower trendline is currently around that area. It provides an additional indication. Nevertheless, this doesn’t mean natural gas can’t fall below 2.54. If it does and shows signs of continuing lower after 2.54, then it likely will go lower.

Bearish Weekly Candlestick Patterns

Of additional concern is the developing candlestick pattern in the weekly chart. Last week natural gas closed with a relatively bearish pattern. There is a long top shadow and the close was in the lower half of the week’s range. It followed an upside weekly breakout earlier in the week and shows a possible failure of the breakout. Currently, the weekly candle for natural gas is also showing a failure of the weekly breakout. Earlier in the week natural gas rose to a new trend high, only to be turned back down to its current position, the lows of this week’s range. It is on track to end with a bearish inverted hammer.

Tightening Consolidation Seen in Monthly View

Overall, natural gas has been consolidating and the range is tightening. This can more easily be seen in the monthly chart where price action of the past few months has largely consolidated around the highs of June. Once natural gas breaks out of the range price could accelerate in the direction of the breakout. The first bottom of the current downtrend in natural gas was reached in February. Since then, it has made numerous attempts to rally and complete a bottom. Therefore, a downside continuation may be the resolution.

For a look at all of today’s economic events, check out our economic calendar.