Minor Bullish Behavior Today in Natural Gas

Natural Gas Forecast Video for 26.04.23 by Bruce Powers

Minor short-term bullish behavior in natural gas today. Today’s outside day reflects natural gas’ switch from bearish sentiment earlier in the session to bullish by the end. Earlier in the session natural gas sold off and fell below yesterday’s low before turning higher to rise above yesterday’s high. Support at the 50% retracement was tested again and held. Natural gas may be able to close above yesterday’s high, which would indicate the bulls remain in charge. Further, depending on how it closes, it is on track to complete a daily bullish hammer candlestick pattern today.

Natural Gas Consolidates in Expanding Triangle

Regardless of short-term price behavior, natural gas remains within consolidation of a developing expanding triangle. This makes short-term price behavior a bit less reliable than normal and extra caution is warranted when engaging the market in the near-term. Not only is it in an expanding triangle pattern, but it is also inside week, where this week’s range is contained within last week’s range. This is another way to identify a degree of consolidation.

Rising ABCD Pattern Points to Upside Targets

The most immediate pattern to pay attention to is the developing ABCD pattern marked in pink on the chart. You can see that the CD leg is currently being constructed. It has a target of 2.58, which is where the CD leg matches the AB leg of the pattern. The ABCD pattern reflects symmetry between swings.

We can also project higher targets from the pattern by using Fibonacci ratio analysis. Take the price distance in the CD leg and multiply it by the key Fibonacci ratios of 127.2% and 161.8%. If we do that additional higher targets are projected at 2.70 and 2.85, respectively. You can see how those extended ABCD targets correspond nicely with other price levels previously identified. Target price zones have therefore been marked with red rectangles on the chart.

Weakness is an Opportunity

Short-term weakness can still provide opportunity for bullish investors and traders to begin or continue to accumulate natural gas in anticipation of an eventual upside resolution to the current consolidation phase. The fact that natural gas is taking longer to complete a bottom, is bullish long-term as once a decisive breakout occurs, it can be done with the bottom and get back to trending.

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