Natural Gas May be Showing Early Signs of Strength

Natural Gas Forecast Video for 12.04.23 by Bruce Powers

Natural gas continues to try and work its way higher as it again rises above last week’s high of 2.20. It is testing resistance around the 20-Day EMA trend indicator around 2.23, with a high of Tuesday was 2.25. A daily close above last week’s high is needed to confirm strength, and then a daily close above the 20-Day line as well. That could happen today, depending on where it closes.

Bullish Divergence

There is a bullish divergence in natural gas as the relative strength momentum oscillator (RSI) is trending up and it remains above an uptrend line. This is supportive of a bullish reversal in natural gas as price has not confirmed a bullish reversal yet if it is to do so.

Higher Weekly Low in Place

As of this week, there is a higher weekly low in natural gas and a higher weekly high. This is an early sign of an uptrend. Of course, it is negated if this week’s low is exceeded to the downside. Assuming a move higher natural gas would first be targeting Fibonacci retracement levels, as shown on the chart. However, the more significant targets will be of more interest as the reversal could see accelerated upside momentum.

Prior Sharp Rally Could be Symptom of What’s to Come

The prior rally saw natural gas advance by 53.9% in only eight days, ending in a high of 3.03. That high price zone is the first major target for natural gas. In addition, 3.06 completes an ABCD pattern. This is where the second leg up off the bottom matches the advance in the first leg up. It is marked with the Fibonacci projection tool on the chart. Further up is the confluence of several Fibonacci price levels, plus prior support and resistance from earlier swing lows and highs or monthly highs or lows. That target zone is identified from around 3.30 to 3.35.

Alternatively, the Bear Trend Continues

If natural gas fails to reverse higher and instead continues its downtrend the next bearish signal will be on a drop below last week’s low of 1.99. Natural gas then heads towards 1.97, followed by 1.79. Each is from previous support levels.

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