Natural Gas Reverses Sharply Off Recent Highs

Natural Gas Forecast Video for 03.05.23 by Bruce Powers

Natural gas falls to a five-day low as it further pulls back from the recent minor trend high of 2.53. The developing bullish AB=CD pattern discussed in prior articles is at risk of failure. This would occur on a daily close below the recent swing low of 2.14 (also weekly low). Also, today will close below the 34-Day EMA for the first time in four days.

Expanding Consolidation Structure

It looks like the market may be deciding to further trace out the developing expanding triangle formation with another test of the lower range of the pattern. The trend low to date is around 1.95. A deeper pullback before natural gas attempts to go higher could provide lower prices to look for bullish setups. Of course, this is true if taking the bullish view. Further, a correction prior to a higher advance puts natural gas closer to the beginning of a new move off the bottom rather than a continuation of an existing trend, which is the case now. It then has a better chance of clearing the bottom and not having to revisit it before an uptrend further confirms a bullish reversal.

Bearish Continuation Always Possible

Certainly, a bearish trend continuation is also possible but will not be indicated until there is a decisive daily close below the lower border of the expanding triangle. This means a drop to a new trend low, below 1.95, may just be a continuation of the expanding triangle rather than a continuation of the bear trend.

Price was rejected around the 50-Day EMA last week with a high of 2.53. Going forward, that line can be watched as it will be an important sign of strength when natural gas closes back above it on a daily basis. It also currently marks the high of the expanding triangle. The 34-Day EMA can be used for earlier signs of strength as we are watching for now. There have been three time recently that natural gas has closed above the 34-Day line. The latest event had three days where price ended at or above the line, while each of the previous two attempts only had one daily close above the line.

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