Natural Gas Price Analysis: Range-Bound with Potential for Upside Breakout

Natural Gas Forecast Video for 08.09.23 by Bruce Powers

Natural gas sees minor signs that support from the past two days around 2.50 may hold and complete the retracement. Yesterday’s low was 2.503. In the early part of today’s session that low was tested as support briefly as natural gas hit a low of 2.50 before a sharp intraday rally. The rally took it up to test yesterday’s high of 2.614. Today’s high is an exact match of 2.614.

Stuck in Trading Range

What this price behavior tells us is that natural gas is stuck in a trading range from 2.50 to 2.614. Before it goes anywhere it needs to get out of the range. The top of the range is bordered by the 34-Day EMA at 2.63. Any advance above today’s high next needs to also get above the 34-Day line before it provides an indication that further strength is forthcoming.

Supporting Clues for a Low

Given that a 78.6% Fibonacci retracement has completed, based on Fibonacci ratio analysis there is a good chance that the low for the retracement has been reached. Also supportive of such a scenario is the relative strength index (RSI) momentum oscillator. It has fallen to a similar level (blue arrows) that preceded each of the prior four rallies. It tells us to be on guard for a potential upside breakout.

It is interesting to see natural gas recognize resistance around the trendline. Yesterday’s opening price was at resistance of the uptrend line, while Tuesday’s low recognized the line as support. As of tomorrow, the internal uptrend line will be crossing the internal downtrend line. This means that after today the potential resistance of the downtrend line will be lower than the uptrend line.

Breakout Above 2.63 Provides Bullish Signal

Once a daily close occurs above the 34-Day EMA, natural gas should be in process of trending higher. The first primary nearby target would be the recent swing high of 2.865, followed by the 32-Week high of 3.02. Once a daily close completes above the lower target of 2.865, the chance for an eventually touch of the 200-Day line, now at 3.26 increases.

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