Natural Gas Correction: Is This a Buying Opportunity for Investors?

Natural Gas Forecast Video for 13.03.23 by Bruce Powers

Natural gas retraces further off its most recent swing high of 3.16. That high completed a 7-day 49.4% advance that triggered a bullish monthly reversal. Therefore, it is not surprising that we are seeing a deeper pullback off that high prior to a continuation higher, if it is to come. The overall outlook remains bullish given that natural gas recently rallied off a significant support zone which reversed price decisively, as seen in the strong rally off the 2.11 low.

Two Key Support Zones May Trigger Bullish Reversal

There are two key lower potential support zones where price could see a bullish reversal. Each is where there are a couple Fibonacci levels. The first area is from around 2.51 to 2.47 and the second from about 2.37 to 2.34. In addition to the Fibonacci levels, the first zone will finish a gap fill and the second also completes an ABCD pattern on the 4-hour chart.

Bullish Candlestick Pattern on Monthly Time Frame

Let’s keep the monthly time frame in mind as it helps inform the shorter time frames. Last month a bullish hammer reversal candlestick pattern occurred. A breakout happened on the first day of this month followed by three days where the daily close was above the February high. This is bullish behavior that supports the likelihood of an eventual resolution to the upside following the completion of the current correction.

First Main Upside Target Highlighted in Red

Currently, the first main upside target is highlighted in red on the chart and covers the 3.44 to 3.54 price range. That range consists of a weekly high, price structure from prior swing highs and lows, and the 23.6% Fibonacci retracement of the internal downtrend. The target for the developing ABCD pattern can be added once the current retracement low has been established.

If natural gas can eventually break through that first significant price zone it should next head towards a range from around 3.83 to 4.02 or so. That price zone comes from prior monthly highs or lows and the confluence of two Fibonacci price levels as seen on the chart.

Although it is not currently expected, at this point a decisive advance above today’s high of 2.69 would provide the first bullish signal.