Natural Gas Downtrend: Signs Point to Extended Bearish Territory

Natural Gas Forecast Video for 13.12.23 by Bruce Powers

It looks like natural gas is not yet done with its retracement. Today’s trading activity started as an inside day but has since morphed to trigger a bearish continuation of the retracement. Sellers clearly remain in control as the early attempt to go higher from the open failed, leading to a sustained decline into new trend lows. A large ranged red candle is the result and natural gas may close below Monday’s low, providing an additional bearish indication.

Sellers Take Over

Yesterday’s trading range created a potentially bullish hammer candlestick pattern. It did not trigger however, and instead sellers took over the next day, today. Therefore, there is a good chance for a continuation of the bearish retracement as natural gas is clearly in control of the sellers.

Support at Long-Term Trendline Fails to Hold

Also bearish, notice that yesterday’s decline took natural gas below the long-term downtrend line for the first time since it rose above the line in early-October. But it was able to end Monday in a bullish position, above support of the trendline. That changed today as natural gas is set to clearly close below the line today. Today is the first confirmation of a failure of the trendline to act as support. Keep in mind that failed patterns can lead to sharp moves.

Next Target is 2.22

Natural gas looks to be heading next towards the 2.22 price area. That is where an extended falling ABCD pattern reaches its target. The CD leg of the decline is extended by the 161.8% Fibonacci ratio to arrive at the target. It reflects a mathematical relationship with the first AB leg down. Lower still is the 88.6% Fibonacci retracement and monthly low at 2.14.

The breakdown of a large bearish flag triggered late last month with the decline continuing into December thereby confirming the bearish signal. Moving averages have confirmed the bearish move as the shorter 21-Day MA (orange) recently dropped below the 50-Day MA (purple). This puts the 1.95 trend low at risk of eventually being tested as support and possibly failing and leading to new trend lows.

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