Natural Gas Price Analysis: Momentum Falters as Range Narrows, Next Direction Awaited

Natural Gas Forecast Video for 04.07.23 by Bruce Powers

Natural gas stalls out with a narrow range inside day on Monday as momentum starts to falter. Given the holidays it is not a surprise to see muted action today. However, the relative strength index (RSI) momentum oscillator has started to turn down and is beginning a possible series of lower swing highs. This puts the current advance on notice as an indication for the next direction is needed.

Last Two Trading Days Provide Key Levels

Today’s inside day makes nearby price levels easy to identify, however, Friday’s range is going to provide more reliable price levels given that today is an inside day. Friday’s high and resistance of note was 2.83, and the low was 2.63. A break lower is triggered on a move below support with a deeper correction likely in the works. If so, the 50% retracement along with the 34-Day EMA is from 2.50 to 2.51, and where support could be seen. And if not, then the 61.8% Fibonacci retracement is at 2.42.

Pause, Not Surprising

The latest rally off the 2.14 low from June 1 was 34.7%, exceeding the prior two advances of 32.2% and 30.0%, respectively. It would be normal and healthy for natural gas to take a pause and possibly a deeper retracement before it is ready to proceed higher if it is to do so. The first sign of weakness will be a drop below today’s low of 2.67, and then confirmed on a drop below Friday’s low.

Upside Possible

On the upside, a decisive rally above Friday’s high signals a possible bullish continuation. Natural gas would then be heading towards the latest trend high at 2.88. If it can keep gaining from there, a price zone from 2.97 to 3.03 will be in sight. That zone includes the completion of a measured move at 3.00, where the rally off the low at 2, matches the first advance off the low at 1. In addition, the previous high resistance is at 3.03, and could be resistance again. Further confirmation of the identified price zone is provided by several Fibonacci measures that identify the same zone.

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