Is Natural Gas Poised for a Reversal?

Natural Gas Forecast Video for 30.03.23 by Bruce Powers

Natural gas reverses off yesterday’s 2.14 low to reach a six-day high. Last week’s high is at 2.52 and if exceeded provides a new bullish signal and confirms that the price of natural gas is improving.

38.2% Retracement Target Completes Just Above Week’s High

A 38.2% Fibonacci retracement of the short downtrend completes just above last week’s high at 2.53, while the 50% retracement is at 2.65. Currently, the 34-Day EMA is also at 2.65, confirming that price level as one to watch. If natural gas can close above last week’s high and the 34-Day EMA, it has a better chance of continuing to strengthen. Also, note that the RSI momentum oscillator as held the trendline shown on the chart during recent weakness. Now, price and momentum are aligned.

If natural gas can close the week in green, it will be a change in character as the prior three weeks are red and closed lower than the open. In addition, at that point a potential double bottom will be in place. However, the double bottom pattern is not confirmed until there is a breakout of the pattern on a move above 3.16, which is a quite higher.

Two Potential Patterns in Development

If the recent low of 2.14 holds, there is a potential ABCD pattern or measured move developing. This where we would be anticipating that the second leg up of the trend coming off the second bottom would at least match the advance off the first leg up. The first leg starts from the trend low of 2.11 from February. The two legs match around 3.19.

Uptrend Confirmed Once There is a Higher Swing High and Higher Swing Low

At that point natural gas would have triggered the double bottom trend reversal pattern and it would also confirm a developing uptrend. Once there is a series of higher swing highs and higher swing lows the uptrend would be intact. A higher swing high occurs on a move above 3.16 and we have a higher swing high as of yesterday, as long as it not broken to the downside.

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