Little Change to Outlook on Natural Gas

Natural Gas Forecast Video for 17.02.23 by Bruce Powers

For those of you watching natural gas it is getting repetitive. Trading has been happening in a very narrow range for 11 days and the price range is becoming further compressed over time. As of now, this week is an inside week, and it is already Thursday. There is therefore a possibility that the week completes as an inside week. In which case, it would be the second inside week in a row.

Volatility Narrows

Inside weeks are a form of consolidation as price trades within a narrowing range. This means that once a breakout occurs the there is a possibility of rapid price movement in the direction of the breakout, either up or down.

It is apparent from the narrowing volatility over the past couple of weeks that selling pressure remains and the downtrend may continue. There are barely signs of an attempt at a counter trend rally as the swing highs keep getting suppressed with renewed selling pressure. This is best seen in an intraday such as the 4-Hour. It is this dynamic that creates the sequence of lower weekly highs.

Buyers Look to Hold the Lows

At the same time, buyers are looking to get in early and at a low price. The lower the price the faster traders know that they are wrong if price falls further. They step in following each short-term selloff to support the price around and a little above the most recent trend low of 2.34. That dynamic is what generates the higher weekly lows.

Of course, a continuation of the trend is first indicated on a drop below the 2.34 trend low and then on a daily close below that price level. At that point natural gas heads towards the next lower target around 2.32. That’s where a large size falling measured move chart pattern completes.

Lower Support Targets

Natural gas topped at 10.03, 25 weeks ago. That high began the first leg down of the developing downtrend. The second leg down started at the 7.60 swing high from late-November. The price decline in the second drop matches the first at 2.32. If price keeps falling from there it is good to know that the bottom of a multi-month support zone is around 2.24.

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