Bearish Trend Continuation Indicated in Natural Gas

Natural Gas Forecast Video for 29.03.23 by Bruce Powers

Natural gas continues to fall and is on its way to test the most recent trend low of 2.11 from February. It dropped through yesterday’s low today and is showing an acceleration in downside momentum as today’s candle looks like it may close near the low of the day.

Monthly Bullish Candle Negated

The 2.11 low is the monthly low for February, which formed a bullish hammer upon completion. Arguably, the pullback to date negates that hammer but certainly once natural dips below it the monthly bullish candle has failed. This opens the door to further sustained selling as pattern failures can see price move faster and further than if it headed in the original anticipated direction.

Watch Out for Drop Below 2.11

A decisive drop below 2.11 triggers a bearish trend continuation with the initial target zone around 2.04 to 1.98. Those price levels come from prior trend lows and monthly lows. They don’t stand out however but can be used as a guide. Lower still is the 127% Fibonacci expansion of the current retracement at 1.83. The 127% extension is frequently used to identify a first target in a trend continuation to new trend high or low. If natural gas keeps falling from there it looks like it is heading to 1.98 or so. Each of the potential support levels are marked with a purple horizontal on the chart.

Current Correction is Greater Than Average of Past 20 Years

Historically, over the past 20 years natural gas has had a significant correction (more than 60% down) eight times, including the current correction. Declines ranged from -68.9% to -82.4%, over that period. The current correction, as of the 2.11 February low, was -78.31% and it has therefore exceeded the average loss of 73.8% over the past 20 years. Natural gas would need to fall to 1.76 to match the maximum correction. It seems reasonable therefore to anticipate a price of 1.76 as the maximum low in natural gas during this correction. Nevertheless, anything can happen in markets. Keep this in mind if price falls further as support will be found at some point.

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