Natural Gas Price Analysis: Intraday Reversal Sparks Concerns, but Uptrend Holds Promise

Natural Gas Forecast Video for 15.09.23 by Bruce Powers

Natural gas triggers a bullish trend continuation on Thursday on a rally above yesterday’s high and the trend high of 2.78. Subsequently, resistance was seen at the day’s high of 2.82, leading to a bearish intraday reversal. For a short time, natural gas was able to get above the internal downtrend line as well. The breakout has failed so far as natural gas has fallen back to the area of the opening price and the lows of the day. And it shows no signs of stopping. Therefore, it looks likely that lower support levels may be tested before another attempt at an advance occurs.

Drop Below 2.70 is Bearish

A drop below today’s low (2.70 at time of this writing) will trigger a bearish reversal, with natural gas then targeting potential support around the 34-Day EMA, previous daily lows, and an internal uptrend line. Together, they create a potential support zone from approximately 2.64 to 2.60. You can see how yesterday’s low tested the 34-Day line as support and price was rejected to the upside. That was the first test of the 34-Day line following the move back above it on Tuesday. If a daily close occurs below the lower range the integrity of the current advance comes under question.

Uptrend Remains Dominant

The likelihood of an eventual continuation higher remains strong. Following a trend low in April natural gas has been progressing higher in a trend channel with a series of higher swing lows and higher swing highs. That pattern is anticipated to continue until the pattern changes. There have been five rallies from swing lows over that time, with the current advance being the sixth.

The performance during those rallies ranges from 18.1% to 34.6%, with the current one having advanced as much as 12.9%. So, the minimum advance of 18.1% has not yet been reached and it should be, at a minimum, if the uptrend price structure is retained.

Fibonacci Extension Points to 3.18 Eventually

There are several potential initial upside targets for natural gas but today we consider just one simple and valid target. Let’s look at the downswing starting from the August swing high at 3.02 and going down to the August swing low at 2.425. Those price levels identify key horizontal resistance and support respectively, for the current positioning of natural gas. Measuring the full decline with the Fibonacci tool identifies a potential target of 3.18, which is the 127.2% Fibonacci extension (greater than 100% retracement) of that decline.

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