Natural Gas Forecast: Signs of a Bottoming Process

Natural Gas Forecast Video for 10.05.23 by Bruce Powers

Natural gas has entered its third day up off the 2.03 retracement low reached last week. There is now a series of higher daily highs and higher daily lows signifying the beginning of a trend. The advance today stalled at short-term resistance of the 34-Day exponential moving average (EMA) with a high of 2.30.

Trades Inside Week Reflecting Further Consolidation

Currently, natural gas is trading inside week, and it may stay that way for the remainder of the week. This makes sense since it is also trading inside an expanding triangle consolidation pattern on the bottom of its trend. This pattern can be either a continuation or reversal. For now, we assume it will lead to a reversal. A bullish AB=CD pattern is forming inside the triangle.

Bottoming Process

The process of bottoming can take some time. Natural gas has been at it for 11 weeks now, ever since the first trend low of 1.97 was hit in February. However, that rally ended with a 53.9% advance in only seven days. That is a strong performance, especially in such a short period of time. Might natural gas see similar aggressive advances again, once it can clear the bottom consolidation pattern? It would certainly seem so.

Target Resistance at 2.61, 2.77, and 2.97

As noted above, within the expanding triangle is a potential AB=CD pattern, where the CD leg matches the advance seen in the AB leg. It meets its target at 2.61. A 127.2% Fibonacci extension of the CD leg completes a little higher at 2.77. That is followed by a 161.8% extension of the CD leg at 2.97. Each level marks a potential resistance zone. The levels are strengthened with other matching Fibonacci levels and prior support or resistance. In addition, a measured move completes at 3.00. That is the first more significant target once natural gas gets off the bottom.

The Second Attempt to Break the 34-Day EMA Occurred Last Week

The first bullish measured move occurred off the first rally from February. Price improved by 53.9% during that advance until it hit resistance just above the 34-Day EMA. This tells us to keep an eye on the 34-Day line going forward as the market recognized it previously. The second attempt at the 34-Day EMA occurred last week when natural gas was able to close above it on two days.

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