Natural Gas Range-bound: Key Levels and Potential Upside

Natural Gas Forecast Video for 18.08.23 by Bruce Powers

Natural gas trades inside day, a day of rest following a drop to 2.57 support yesterday. Support was tested with today’s low of 2.575. Both today’s trading range and yesterday’s range are bouncing between resistance around the 61.8% Fibonacci level at 2.67 and support around the 78.8% retracement at 2.58. Today’s high is 2.67 and yesterdays was 2.674.

Deceive Rally Above 2.69 Needed for Signs of Strength

A decisive rally above yesterday’s high provides the next sign of strength, while the 21-Day EMA is close by at 2.686. Therefore, rather than using yesterday’s high, a daily close above 2.686 will better confirm strength. It is also notable that a close above the 21-Day EMA will also be close above the downtrend line. That will provide another clue pointing to increasing demand. Subsequently, the next higher price level to watch is the prior swing high at 2.79. Moreover, this week’s high is at 2.86.

Minimum Fibonacci Retracement Higher at 3.28

If yesterday completed the retracement and natural gas eventually heads higher, the higher target zone from 3.20 to 3.31 remains the target zone. To simplify, the crossover of the two trend lines can be used as a guide. They cross at the 23.6% Fibonacci retracement at 3.28 (blue arrow). That’s a retracement measuring the downtrend that starts from the November 23 swing high. The 23.6% retracement of the full downtrend, beginning off the 10.03 swing high from last September is way up at 3.85.

Price History Shows Reversal of Downtrend Always Exceeded a 23.6% Retracment

The relationship of the price of natural gas to the minimum Fibonacci retracement of 23.6% may be pointing to a bullish clue. What is the chance that at least the minimum Fibonacci retracement will be seen in natural gas? Given its price history, it seems high. A quick review of the trading history of natural gas since 1997 shows no downtrend that didn’t retracement at least 23.6%. That would seem to put the odds in favor of the bulls at this stage.

Of course, this analysis assumes that the recent lows are solid and create a floor of support for the price of natural gas to rise from. There is technical supporting evidence for that.

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