Natural Gas Reverses Higher off Fibonacci Support

Natural Gas Forecast Video for 08.05.23 by Bruce Powers

Natural gas looks to have found support around the 78.6% Fibonacci retracement with a low of 2.03. It is on track to close higher than the open, with a green candle for the first day in five days. If the low continues to hold natural gas is signaling a bullish reversal on a move above today’s high of 2.17, with strength confirmed on a daily close above that high. Of course, a drop below today’s low of 2.03 is bearish and signals a continuation of the retracement.

ABCD Pattern Targets 2.61

We can now take a new measurement for the potential AB=CD pattern, this time using today’s low for the end of the C leg. Subsequently, a new target for the completion of the ABCD pattern is at 2.61, almost an exact match with the 61.8% Fibonacci retracement target from measuring the downtrend off the March peak. That is approximately 23% higher than current prices.

Having two pieces of analysis identify a similar target zone improves its chance of being reached. You can also see on the chart how each higher subsequent target area is derived by Fibonacci confluence with price structure (prior support or resistance).

Watch Fibonacci Confluence Zones

The second target zone as noted on the chart centers around the 78.6% Fibonacci retracement level and includes the 127.2% projected target from the ABCD pattern. In other words, if natural gas continues higher past the top of the first target zone at 2.67, before a noticeable retracement, then the CD leg is projected by 127.2% of the AB leg.

Measured Move Completes Higher at 3.00

However, the largest obvious pattern is the completion of a measured move with the first move starting from 1 and the second from 2. The two rallies will match on a percentage basis if natural gas reaches 3.00. It just so happens that that target is very close to the 3.03 swing high that completed the first measured move. Again, two pieces of analysis identifying a similar price zone. Pay attention to natural gas if it is able to rise to that target area.

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