Natural Gas Heads Lower to Stop at 88.6% Fibonacci Retracement

Natural Gas Forecast Video for 28.03.23 by Bruce Powers

Natural gas continued its decent today, falling to 2.18 before bouncing intraday. The decline triggered a trend continuation as price fell below the prior trend low of 2.24. An 88.6% Fibonacci retracement complete at 2.19 before buyers stepped in.

Bearish Continuation in Play

A bearish continuation is now indicated on a move below today’s low with the first target being the prior swing low of 2.11. However, once natural gas falls below the 88.6% Fibonacci level and stays there the likelihood of a bearish continuation increases. Lower price levels to watch for potential support including previous swing lows at 2.04, 1.98, and 1.73.

If Bullish Reversal Comes, It Could Happen Quickly

At the same time, let’s be prepared for a surprise reversal higher. Minor strength is indicated on a rally above today’s high of 2.30. However, exceeding the three-day high of 2.38 is a stronger indication as it would put silver back above the short downtrend line and indicate the beginning of a trend channel breakout. Further strength is indicated on a move above the 10-Day EMA (orange), now also at 2.30.

Natural gas has pulled back quite a bit following its 49.4% advance off the February low in only seven days. That shows enthusiastic buying. Could the buyers step up in a similar way again if silver turns back up? We’ll have to wait and see but there is an RSI bullish divergence intact. Momentum is holding as price declines further. The red trendline drawn across the bottom of the RSI would support a possible bullish reversal. Not a signal by itself but it is supporting evidence that would play a role if price does rise before falling to new lows.

Upside Targets if Natural Gas Reverses

As it stands now, natural gas would complete an ABCD pattern at 3.23 with a more significant target zone highlighted in red on the chart. That target zone include a couple of Fibonacci targets and prior swing highs and lows where either support or resistance was seen in the past. One more item to consider is the bullish monthly hammer that completed February. Will that bullish candle fail or continue? We’ll have to see.

For a look at all of today’s economic events, check out our economic calendar.