Natural Gas Falls Further Before Closing Up for the Day

Natural Gas Forecast Video for 22.03.23 by Bruce Powers

Natural gas falls to a new trend low on Tuesday, before finding intraday support just shy of the 88.6% Fibonacci retracement at 2.23. The low of the day was 2.24 at the time of this writing.

So far, natural gas is up over 6% from Monday’s close and more than 9% above today’s low. It remains to be seen whether today’s strength is temporary or sustainable enough to see upside follow-through in the coming days. A daily close above the two-day high of 2.52 would provide the next indication that strength is building. Following that high, a daily close above the 21-Day EMA, now at 2.70 would provide the next sign of strength.

Price Levels for Signs of Strength

Nevertheless, there is a small swing high at 2.79 from March 14 that provides the more significant price level. For one it is a swing high, and second, it makes up the price structure of the short-term downtrend. Once price rises above it that downtrend is showing more reliable signs of a bullish reversal.

The first notable resistance zone is highlighted in red on the chart from around 3.44 to 3.54 and consisted of Fibonacci levels and prior monthly support and resistance. However, if we assume today’s low is complete, we can add in an ABCD pattern. That pattern is shown on the chart and completes a below the red zone at 3.28.

Possible Double Bottom in the Works

It is possible that today’s low is the second low in the creation of a double bottom bullish reversal pattern. A double bottom is a classic trend reversal pattern in technical analysis and recently occurred in gold. However, so far, we’re seeing a potential double bottom. A trigger is first needed to confirm the pattern. That happens on a decisive rally above the swing high at 3.16, which is situated between the two bottoms. If the pattern triggers the minimum classic target from the pattern would be around 4.21. Either of the targets discussed herein provide significant upside potential for natural gas, assuming it does not break lower instead.

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