Natural Gas Price Analysis: Support Holds, Reversal Potential Looms

Natural Gas Forecast Video for 05.06.23 by Bruce Powers

Natural gas further tests support for a second day Friday as it trades inside day. Support was seen off 2.14 on Thursday. The price area is identified at the confluence of the uptrend line, 78.6% Fibonacci retracement, and the 78.6% target of a falling ABCD pattern. A 100% target for the ABCD pattern is lower at 2.05, while a 127.2% extension of the pattern is at 1.94.

Inside Day Sets Up for Next Week

For aggressive traders and investors, a breakout next week of the inside day from today is bullish and could be the reversal that ends this correction. Nevertheless, a rally above Thursday’s 2.28 high will provide further confirmation of strength. This week’s high of 2.45 will then become a key pivot as a daily close above it confirms strength on the larger time frame and the larger time frame patterns can influence the shorter time frames. Notice that today is the first green candle in six days. It could be an early sign of strength to come.

Natural Gas to Close Weak

Natural gas is on track to end the week in a relatively bearish position given that it remains in a downtrend, continues to sit at support, and will complete the week near the bottom of the week’s range. This means that a deeper retracement could occur before this correction is over. Some of the key price levels are noted at the beginning of this article.

Upside Potential

Once a reversal is confirmed natural gas should be testing resistance at the most recent swing high of 2.69. Before that it will need to rise above an earlier and less significant swing high at 2.48. The next higher target zone above 2.69 is around the 78.6% Fibonacci retracement at 2.80. Also, be aware of the long-term downtrend line that is getting closer and creating a symmetrical triangle type pattern as the uptrend and downtrend line cross in less than three weeks. Once prices rise above the downtrend line, activity may pick up, it is a sign that the market may be changing.

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