Decoding Natural Gas’s Shifting Landscape

Natural Gas Forecast Video for 24.11.23 by Bruce Powers

Natural gas continues to consolidate around support of the lower channel line with a bullish bias. Yesterday was the first day in five where prices ended higher than where they opened and today will likely be the second day with a similar outcome.

Further, a three day high has now been reached in natural gas thereby triggering a bullish reversal. Whether the reversal continues to strengthen or not remains to be seen, First, we’ll be watching for signs of strength in the closing price relative to the day’s trading range. A daily close above 2.92 will be stronger than a close below that price level.

Character Change

The one thing we can surmise from the bottoming pattern in natural gas is that its character seems to be changing. That can be seen simply by looking at the change in volatility that began following a large gap up on September 27. Further, the change coincides with a bullish breakout of the long-term downtrend line.

The breakout led to an advance to new trend highs and a rally above the 200-Day EMA in October. It was the first-time natural gas had risen above the 200-Day line since December 2022, a sure sign of strength. The subsequent retracement successfully tested support of the 50-Day line for the first time in in many months as well. This is a sign of further strength that again led to new trend highs.

Completion of 22.6% Correction

However, uncertainty starts to grow as natural gas retraces hard following the 3.64 trend high. The bullish moving average relationships failed as the retracement took the price of natural gas down by 22.6% from the October 27 swing high of 3.64, and below each moving average. Nevertheless, if we think about the larger price structure that is evolving it continues to point to an eventual bullish continuation.

Rising Trend Channel Remains Intact

The rising trend channel structure remains in good sharp and natural gas is above the long-term downtrend line. Further, it is typical following an upside breakout to eventually retrace to the breakout area to test it as support. That process was likely completed yesterday. If we use the 2.88 swing high from June as the previous resistance area that has been tested as support.

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