Natural Gas Correction Continues, Potential Targets Ahead

Natural Gas Forecast Video for 04.05.23 by Bruce Powers

Natural gas pulls back further off its recent 2.53 swing high reached three days ago. The correction has completed a 61.8% Fibonacci retracement so far, with the next lower target around the 78.6% Fibonacci retracement at 2.07. This weakness provides more backing and filling for the developing expanding triangle consolidation pattern. It may lead to an eventual bottom bullish reversal.

Consolidation Bottom Expanding Triangle

The low for natural gas is around 1.95. It is certainly possible that the current correction may test that low and even fall further. However, keep in mind the expanding triangle formation as a drop below the prior trend low will provide a bearish signal, but natural gas may just be looking to test the lower part of the triangle instead. In other words, downside momentum may be short lived as potential support is around the lower line of the expanding consolidation pattern.

Pullback Healthy

A pullback is healthy for the potential uptrend as it may provide a clearer bottom. A bottom that has been tested as support over some time and holds, is a stronger bottom. This means that once price rises away from the bottom it is free to keep going rather than fall back down and test the bottom again and again.

Upside Targets Following Bullish Reversal

There are several upside targets for natural gas once it gets going. Two of the key targets include 2.69 and 3.00. The first target is the completion of an AB=CD pattern, which has been redrawn from prior days to switch to today’s low as the C point. At the 2.69 target the CD leg equals the move in the AB leg, reflecting symmetry or similarity between swings. The AB=CD is a core fractal pattern that is seen in markets. Sometimes it is referred to as a zig zag or lightening pattern.

If natural gas is going to eventually trigger a bullish reversal and rally off recent lows, then current weakness can be watched for possible setups to take advantage of a rally if it does occur. They should provide better risk to reward given that price is closer to lows.

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