Natural Gas Rebounds: Bulls Resurface Amidst New Trend Low

Bruce Powers
Published: Dec 13, 2023, 21:16 UTC

Natural gas rebounds, signaling potential reversal from a record low, as today's candle turns green, yet further confirmation of strength is needed

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Natural Gas Forecast Video for 14.12.23 by Bruce Powers

Natural gas falls to a new trend low of 2.235, where it found support and rallied back above the prior trend low at 2.28. The rally turned today’s candle green with natural gas set to close above the prior trend low and in the top half of the day’s trading range. If it continues in a similar manner into the close, it will have the most bullish one day candlestick pattern since the second leg down began off the November 15 minor swing high (C).

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Natural Gas Falls by 38.7% Since October High

Natural gas was down by 38.7% from the October 27 trend high at today’s low. The low was just shy of completing a falling ABCD pattern at 2.22. That’s where the CD leg is extended by the 161.8% Fibonacci ratio relative to the AB leg of the decline. This is the largest bearish correction for natural gas since the February 23 bottom. The decline captured all the prior price action to arrive back where it was in June.

If today’s low can sustain support a rally back to test prior support levels as resistance could come soon. Notice that the relative strength index (RSI) momentum oscillator has reached its most oversold reading (below 30) since early-February. This doesn’t mean we will rally but it is a sign that the bottom is likely getting closer if today is not it.

Bearish Signs Remains

Nevertheless, today’s close will likely be the second day in a row that natural gas has closed below the long-term downtrend line. It reflects continued underlying weakness in demand. It also puts at risk the low, as a continuation lower may occur. The first lower price level to watch for possible support and the completion of the correction starts with the 2.22 completion of the falling ABCD pattern. Next, is the 88.6% Fibonacci retracement and prior swing low support at 2.14.

Rally Above Today’s High of 2.385 Signals Strength

Strength will first be indicated on an advance above today’s high of 2.385. Natural gas then heads up to a potential resistance level at 2.425, followed by this week’s high at 2.49. However, the more significant price zone is up around 2.88. You can see how that price area has been support or resistance in the Past (up and down arrows) and it matches the intersection of the downtrend internal downtrend line and the long-term uptrend line.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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