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Natural Gas Forecast: Key Levels to Watch for Upside Potential

By:
Bruce Powers
Published: Sep 20, 2023, 20:41 GMT+00:00

Natural gas takes a breather after yesterday's bullish trendline break but eyes a potential breakout above 2.87 for further gains.

Natural Gas Plant, FX Empire

In this article:

Natural Gas Forecast Video for 21.09.23 by Bruce Powers

Natural gas takes a rest and pulls back to below yesterday’s low. It is on track to close down for the day. This follows yesterday’s bullish trendline break.

A graph of stock market Description automatically generated with medium confidence

Bullish Signal on Rise Above 2.82

A breakout above today’s high of 2.82 provides the next bullish signal, with strength further confirmed on a move above yesterday’s high of 2.87. That high exceeded the 2.865 swing high (A) but natural gas has not yet confirmed the breakout with upside follow-through and a daily close above that price level.

ABCD Pattern Targets 2.94

The next upside target is around the initial completion of a rising ABCD pattern at 2.94. That is where the CD leg of the pattern matches the price appreciation seen in the first leg labeled AB. The completion of the pattern can be followed by signs of resistance. Nevertheless, if natural gas can subsequently break through the 2.94 area and keep going, it will then look to advance above the August 9 swing high of 3.02.

If a breakout above the 3.02 swing high occurs, then the extended version of the ABCD pattern provides a target of 3.06. The extended ABCD pattern multiplies the price change of the AB leg by the 127.2% Fibonacci ratio rather than 100%, to derive the advance up from the C point.

Weakness Prevails on Drop Below 2.69

On the downside, a deeper pullback is triggered on a drop below today’s low of 2.69. The 55-Day EMA around 2.64 may then be tested as support. Since the 55-Day line was first tested two days ago, following the upside breakout from September 12, a subsequent test should also be successful and reject price to the upside. If it does not, then the bullish characteristics showing up in the price action of natural gas will have faded.

The three-day low of 3.71 is a swing low defining a rising internal trend. If natural gas falls below it the pattern has changed, and the situation needs to be reevaluated. The primary and larger ABCD pattern would not be violated on a drop below 3.71, just the smaller trend or ABCD pattern (not labeled).

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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