Natural Gas Forecast Video for 04.12.23 by Bruce Powers
Further consolidation was seen today in natural gas as it remains stuck in a relatively tight range, pushing up against resistance represented by the rising trendline. Today’s price action doesn’t change anything as it is the third day of tight ranges. Nevertheless, there are several indications pointing to a likely resolution to lower prices, starting with the decline below the rising trend line on Monday.
Then, there was a failed rally on Tuesday that led to another drop below the line on Wednesday, which is where it remains. The trendline was key support across the lower boundary of the rising trend channel and a sustained break below it increases the chance for a bearish continuation.
This Week’s Low and High Provide Key Levels
This week’s low of 2.71 is key near-term support and a drop below it signals a bearish continuation of the decline. The next lower target will be the completion of a falling ABCD pattern at 2.62. Signs of support might be seen there or a continuation lower. If this week’s low is busted to the downside, then the decline has the potential to accelerate given that the breakdown from the rising trend channel is being confirmed. Lower targets would then include the 2.55 swing low, and two prior monthly lows at 2.50 and 2.43.
Bullish Reversal is Possible
If rather than falling natural gas rises without breaking below this week’s low, then we may be looking at a failed bearish trigger. A decisive rally and daily close above this week’s 2.99 high would be needed though for a confident bullish signal. That would put natural gas above a weekly high as well as the 50-Day EMA (orange). Such a move should negate this week’s bearish decline and open the possibility for an eventual continuation of the rising trend channel.
Reversal of Bearish Signals Clears Way for Higher Prices
A daily close above this week’s high would not only negate this week’s decline but also negate the monthly bearish signal that triggered in November on a decline below October’s low of 2.82. This was only the second time in seven months that a drop below a prior month’s low occurred. The previous time was in August, and it was followed by a quick recovery. However, November’s range is wide, and it closed red and below October’s low.
Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.