Bearish Trend Intensifies: Natural Gas Hits New Lows, Tests Support

Natural Gas Forecast Video for 24.08.23 by Bruce Powers

The bearish correction continues today as natural gas triggers a weekly breakdown on a move below last week’s low of 2.52. It gave another new bearish signal today on a drop below the uptrend line at the lower boundary of an ascending parallel trend channel. Further, it has exceeded the 88.6% Fibonacci retracement to the downside. At the time of this writing, natural gas is trading at lows of the day and may continue to fall. The low for the day so far is 2.49.

Next Lower Target Prior Swing Low at 2.46

Given the above, the chance that natural gas will drop below the most recent swing low of 2.46 has greatly increased. However, it is also a possible support area. It is confirmed by the completion of an extended falling ABCD pattern at the same price. This means that both the prior swing low and completion of the ABCD pattern are marking a similar potential support level. Support might be seen there. Nonetheless, if natural gas falls further it is breaking an important pivot.

Break Below 2.46 May Target 2.41 and 2.35

A drop below 2.46 has natural gas next targeting a weekly high and a 61.8% Fibonacci retracement at 2.41. Further down is the next lower target around 2.35 and is derived from two Fibonacci levels. In this case, a 61.8% retracement of the full uptrend is combined with the 161.8% Fibonacci extension of the ABCD pattern.

ABCD Pattern’s CD Leg matching AB Leg Price Change

In an ABCD pattern we are looking for the CD leg of the trend to match the price change in the prior AB leg. The standard measure is a 100% match, which reflects similarity of symmetry between the two swings. However, there are Fibonacci extensions that can be used on the CD leg if the trend continues. The two primary ratios are 127.2% and 161.8%. The second ratio is a Golden Ratio, while the first is the square root of 1.618 or the inverse of 0.786 (1/0.786).

Monthly Bearish Signal

Finally, today’s drop triggered a monthly bearish signal as last month’s low of 2.48 was exceeded to the downside. It seems like the market may be recognizing this progression given that we’re seeing new lows in natural gas today late in the session.

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