Decoding Natural Gas Trends: Challenges and Potential Reversal Ahead

Natural Gas Forecast Video for 27.11.23 by Bruce Powers

Uncertainty spiked today generating an outside day for natural gas. It further tested support today around the uptrend line with a new trend low of 2.80. Wednesday’s low of 2.82 was busted to the downside as the uptrend was breached for a short time. Fortunately for the bulls it closed back above the line to end the week.

Completion of 78.6% Fibonacci Retracement

Today’s decline got closer to a more specific match with the 78.6% Fibonacci retracement at 2.78. Given today’s outside day the two key price levels have a wider spread than previously. Today’s low of 2.80 is support. A decline below it indicates a possible bearish continuation of the retracement with the 2.78 level a nearby target. That price area is followed by the 88.6% Fibonacci retracement at 2. 68. Of course, a drop below the uptrend line is bearish but not confirmed until there is a daily close below it. If that happens, the odds of reaching the 2.68 target increases.

Situation is Mixed

The situation with natural gas is mixed currently. Failed attempts to stay above the 200-Day EMA and 50-Day EMA is a sign of caution to the bulls, while natural gas remains within a solid rising trend channel. On a larger view, a bearish flag appears. Natural gas is in a critical area of support now given the bullish channel. An upside bullish reversal is still needed though to give a sign of strength that may lead to higher prices.

Breakout Above 2.95 is Bullish

A breakout above today’s high of 2.95 gives the first bullish signal. Natural gas then heads up into potential resistance around the 50-Day EMA at 3.03 and the 200-Day EMA at 3.17. Before it shows enough strength to take out the 200-Day line it needs to close above the 50-Day line. You can see how price has been rotating from the bottom line to the top line and then back to the top line again for the life of the channel.

The pattern is not perfect, yet we can say with some confidence that once a bullish reversal occurs off the bottom line, price heads towards the top line. What is less known is how long it might take. The next major higher around 3.86 would fit within this scenario. Reaching 3.86 will complete a 23.6% retracement of the entire previous downtrend.

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