Intriguing Symmetry: Analyzing Natural Gas Correction and Potential Rebound

Bruce Powers

Amidst bearish trends, today's doji and shorter range in natural gas hint at a potential momentum shift, raising questions about a looming reversal above 3.08.

Natural Gas, FX Empire

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Natural Gas Forecast Video for 13.11.23 by Bruce Powers

The retracement in natural gas hit a new low of 2.99 today before bouncing. It is on track to close with a relatively narrow range day and a doji (open and close is similar) showing some indecision. The pattern of lower daily lows and lower daily highs continued today, and natural gas is on track to end Friday below the 50-Day EMA. It failed to provide support yesterday and today’s close looks like it will again indicate weakness relative to the 50-Day line.

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Momentum Slowing

Nevertheless, today’s range is relatively shorter than the daily trading ranges of the past four days. Along with the doji, it is reflecting a shift in momentum. Despite bearish indications, natural gas may signal a bottom upon a decisive rally above today’s high of 3.08. It will then have to contend with potential overhead resistance around the 200 Day EMA at 3.18.

50-Day EMA Support at Risk

As stated in previous articles, the 50-Day EMA provides a key near term level that helps define the boundaries of the developing internal uptrend. The initial uptrend can be defined by the lower rising trendline that starts from the April lows, while the internal uptrend has a higher slope with a trendline starting from the September 26 low. As the 50-Day line converged with the trendline around the last swing low (C). That should have the effect of increasing the chance that either or both the lines will identify support.

Lower Levels if Price Continues to Fall

Nevertheless, a decline to below today’s low of 2.99 will likely lead to gold encountering the next lower support zone from 2.90 to 2.86. Last month’s low will also be close by at 2.82. Depending on if and when it is reached will determine whether the lower rising channel line will be touched following a drop below 2.86. This lower zone might be hit when the rising line is close to the support zone just noted.

Potential Symmetry with Prior Correction

It is interesting to note that there is symmetry possible with the last correction. Gold fell by 17.6% in 10 days from the October swing high (B) to the bottom of the correction. The current retracement has seen price correct by 17.9% in 10 days. This is a potential match in both time and price, if a rally follows today’s low.

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About the Author

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.

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