Natural Gas Confirms its Bearish Stance

Natural Gas Forecast Video for 02.02.23 by Bruce Powers

Natural gas falls deeper into oversold territory as a new bearish trend continuation signal triggered. The 14-Day RSI reached 25.56 Wednesday, the most oversold since February 2017, nearly six years ago when it hit a low of 24.46. Not only that but based on today’s candlestick selling is intensifying as the day’s range is wider than the prior five days or so.

Further, it opened near the high of the range and is currently near the low of the range, generating a long-range red candle reflecting sellers being in charge. In the near-term these signs point to lower prices for natural gas. Yet, we’re closer to a bottom than we’ve been since the start of the correction.

Confluence of Price Support Levels

Natural gas next heads to a somewhat large support zone derived from prior monthly support levels, reached in late-2020 and early-2021, from 2.45 to 2.24. That support zone was marked over a seven-month period with the bottom of the range that was never breached. Within that price zone are two key Fibonacci targets.

Completion of Two Patterns Close at Hand

First, is the 88.6 Fibonacci retracement of the full uptrend, beginning from the June 2020, which is at 2.42. Price has fallen close to that level so far today and may reach it by the time this article is posted. Shortly below there is the completion of a measured moved at 2.33. That’s where the second leg down of the downtrend off the late-August 2022 high of 10.03 matches the price depreciation of the first leg down. Measured moves identify symmetry or similarity between market swings. Those two legs down are marked with purple lines on the chart.

No Bullish Signs

There are no bullish signs just yet. An obvious bullish reversal signal will be needed to get the more buyers engaged once a turn comes. The obvious trend indicator is that 12-Day EMA (orange line). That’s because it was pegged specifically as resistance last week and it held. Therefore, the downtrend remains in place if price is below that line. Of course, there will be other indicators to watch once some signs for a bottom are showing up. So far, that is not the case as the bears have their way.

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